Exhibit 13



PAMRAPO BANCORP, INC. AND SUBSIDIARIES



Managements Discussion and Analysis of Financial Condition and Results of Operations



GENERAL



Pamrapo Bancorp, Inc. (the Company) owns 100% of the issued and outstanding
stock of Pamrapo Savings Bank, SLA (the Bank), which is the primary asset of the Company. The Companys business is conducted principally through the Bank.



BUSINESS OF THE COMPANY



The Banks principal business has been and continues to be attracting retail deposits from the general public and investing those
deposits, together with funds generated from operations, primarily in one-to-four family, owner occupied residential mortgage loans. In addition, in times of low loan demand, the Bank will invest in mortgage-backed securities to supplement its
lending portfolio. The Bank also invests, to a lesser extent, in multi-family residential mortgage loans, commercial real estate loans, home equity and second mortgage loans and consumer loans.



The earnings of the Bank depend primarily upon the level of net interest income, which is the
difference between the interest earned on assets such as loans, mortgage-backed securities, investments and other interest-earning assets and the interest paid on liabilities such as deposits and borrowings. Net interest income is affected by many
factors, including regulatory, economic and competitive factors that influence interest rates, loan demand and deposit flow. Net interest income is also affected by the amount, composition and relative interest rates of the Banks assets and
liabilities and by the repricing of such assets and liabilities. The Bank is vulnerable to interest rate fluctuations to the extent that its interest-bearing liabilities mature or reprice more rapidly than its interest-earning assets. Such
asset/liability structure may result in lower net interest income during periods of rising interest rates and may be beneficial in times of declining interest rates. The Banks net income is also affected by provisions for loan losses,
non-interest income, non-interest expenses and income taxes.



FINANCIAL CONDITION



The Companys
consolidated assets at December 31, 2004 totaled $639.9 million, which represents an increase of $3.0 million or 0.47% when compared to $636.9 million at December 31, 2003, primarily due to an increase in loans receivable.



Securities available for sale decreased $283,000 or 7.22% to $3.6 million at December 31,
2004 when compared to $3.9 million at December 31, 2003. The decrease during the year ended December 31, 2004, resulted primarily from proceeds from repayments on securities available for sale amounting to $438,000 which offset purchases of
securities available for sale of $35,000 and an increase in unrealized gain on such securities of $120,000. Investment securities held to maturity decreased $113,000 or 1.20% to $9.3 million at December 31, 2004 when compared to $9.4 million at
December 31, 2003.



Mortgage-backed securities held to maturity decreased $18.3
million or 8.38% to $200.1 million at December 31, 2004 from $218.4 million at December 31, 2003. The decrease during the year ended December 31, 2004 resulted primarily from principal repayments of $52.4 million on mortgage-backed securities
sufficient to offset purchases of mortgage-backed securities of $34.3 million.



Net loans amounted to $395.8 million and $378.6 million at December 31, 2004 and 2003, respectively, which represents an increase of $17.2 million or 4.54%, primarily due to loan originations exceeding loan payments.



Total deposits at December 31, 2004 decreased $2.9 million or 0.59% to $489.3 million
compared to $492.2 million at December 31, 2003.



Advances from the Federal
Home Loan Bank of New York (FHLB-NY) totaled $89.0 million and $87.0 million at December 31, 2004 and 2003, respectively. The net increase of $2.0 million during the year ended December 31, 2004, resulted from new advances from the
FHLB-NY, which were used to fund loan commitments and for general corporate purposes.



Stockholders equity amounted to $55.1 million and $51.3 million at December 31, 2004 and 2003 respectively. During the years ended December 31, 2004 and 2003, net income of $7.9 million and $7.8 million, respectively, was recorded and
cash dividends of $4.2 million and $4.0 million, respectively, were paid on the Companys common stock. During the years ended December 31, 2004 and 2003, the Company repurchased 11,431 and 174,673 shares, respectively, of its common stock for
$272,000 and $3.2 million, respectively, under a stock repurchase program.



RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003



NET INCOME



Net income increased by $163,000 or 2.09% to $7.9 million during the year ended December 31, 2004 compared to $7.8 million for the year ended December 31, 2003. The
increase in net income during the 2004 period was primarily due to decreases in total interest expense of $2.0 million and provision for loan losses of $2,000 along with an increase in non-interest income of $44,000, which more than offset a
decrease in total interest income of $772,000, along with increases in non-interest expense of $983,000 and income taxes of $170,000.



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



Managements Discussion and Analysis of Financial
Condition and Results of Operations (continued)



INTEREST INCOME



Interest income on loans during the year ended December 31, 2004 decreased by $1.2 million or 4.60% to $24.9 million when compared to $26.1
million during 2003. During the years ended December 31, 2004 and 2003, the yield earned on the loan portfolio was 6.45% and 6.94%, respectively. The average balance of loans outstanding during the years ended December 31, 2004 and 2003, totaled
$385.6 million and $376.0 million, respectively.



Interest on mortgage-backed
securities increased $521,000 or 5.44% during the year ended December 31, 2004 to $10.1 million compared to $9.6 million for 2003. During the years ended December 31, 2004 and 2003, the average balance of mortgage-backed securities totaled $215.9
million and $199.6 million, respectively, resulting in a net increase of $16.3 million or 8.17%. The yield earned on the mortgage-backed securities portfolio was 4.67% and 4.80% during 2004 and 2003, respectively. Interest earned on investment
securities increased by $108,000 or 14.65% to $845,000 for the year ended December 31, 2004, when compared to $737,000 for 2003. The increase during the year ended December 31, 2004, resulted from an increase of $1.3 million or 12.38% in the average
balance of the investment securities portfolio, along with an increase of eighteen basis points in the yield earned on the investment securities portfolio from 7.00% in 2003 to 7.18% in 2004.



Interest on other interest-earning assets amounted to $187,000 and $346,000 during the years
ended December 31, 2004 and 2003, respectively. The average balance of other interest-earning assets outstanding decreased $4.7 million or 25.41% to $13.8 million in 2004 from $18.5 million in 2003, along with a decrease of fifty-one basis points in
the yield earned on other interest-earning assets to 1.36% in 2004 from 1.87% in 2003.



INTEREST EXPENSE



Interest on deposits decreased $1.6 million or 16.49% to $8.1 million during the year ended December 31, 2004 compared to $9.7 million for 2003. The decrease during 2004
was attributable to a decrease of forty basis points in the Banks average cost of interest-bearing deposits to 1.77% for 2004 from 2.17% for 2003, partially offset by an increase of $13.0 million or 2.92% in the average balance of
interest-bearing deposits outstanding.



Interest on advances and other borrowed
money decreased $472,000 or 12.61% to $3.3 million during the year ended December 31, 2004 compared to $3.7 million for 2003. The decrease during 2004 was attributable to a decrease of fifty-three basis points in the Banks cost of borrowings
from 4.15% for 2003 to 3.62% for 2004, sufficient to offset an increase of $81,000 in the average balance of advances and other borrowed money outstanding.



NET INTEREST INCOME



Net interest income for the year ended December 31, 2004, increased $1.3 million or 5.58% to $24.6 million for 2004 as compared to $23.3 million for 2003. The Banks
net interest rate spread increased from 3.57% in 2003 to 3.66% in 2004 and its interest rate margin increased from 3.86% in 2003 to 3.92% in 2004. The increase in net interest rate spread primarily resulted from a forty-three basis point decrease in
the cost of interest-bearing liabilities from 2.51% in 2003 to 2.08% in 2004, sufficient to offset a thirty-four basis point decrease in the yield of average interest-earning assets from 6.08% in 2003 to 5.74% in 2003. The average balance of
interest-earning assets amounted to $627.0 million in 2004 and $604.6 in 2003 and the average balance of interest-bearing liabilities amounted to $549.0 million in 2004 and $535.9 million in 2003.



PROVISION FOR LOAN LOSSES



During the years ended December 31, 2004 and 2003, the Bank provided $82,000 and $84,000,
respectively, for loan losses. At December 31, 2004 and 2003, the Banks loan portfolio included loans totaling $2.6 million and $1.6 million, respectively, which were delinquent ninety days or more. The Bank maintains an allowance for loan
losses based on managements evaluation of the risk inherent in its loan portfolio, which gives due consideration to changes in general market conditions and in the nature and volume of the Banks loan activity. The allowance for loan
losses amounted to $2.50 million at December 31, 2004, representing .62% of total loans and 96.44% of loans delinquent ninety days or more compared to an allowance of $2.52 million at December 31, 2003, representing .65% of total loans and 161.53%
of loans delinquent ninety days or more. During the years ended December 31, 2004 and 2003, the Bank charged off loans aggregating $107,000 and $126,000, respectively. The Bank monitors its loans portfolio and intends to continue to provide for loan
losses based on its ongoing periodic review of the loan portfolio and general market conditions.



NON-INTEREST INCOME



Non-interest income increased by $44,000 or 1.72% to $2.599 million during the year ended December 31, 2004 as compared to $2.555 million for 2003. The increase in
non-interest income during 2004 resulted primarily from an increase in the gain on sale of investment in real estate of $128,000 and miscellaneous income of $86,000, sufficient to offset a decrease in fees and service charges of $170,000. During the
year ended December 31, 2004, the Bank sold its investment in real estate with a carrying value of $124,000 for $294,000 and recognized a net gain of $170,000.



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



NON-INTEREST EXPENSES



Non-interest expenses increased $983,000 or 7.67% to $13.8 million during the year ended December 31, 2004 compared to $12.8 million for
2003. Salaries and employee benefits, advertising and miscellaneous expenses increased $934,000, $75,000 and $36,000, respectively, during the year ended December 31, 2004, which were partially offset by decreases in occupancy and equipment of
$33,000 and $29,000, respectively. The increase in salaries and employee benefits of $934,000 or 13.80% in 2004 was primarily the result of increased medical insurance costs and normal salary increases.



INCOME TAXES



Income tax expense totaled $5.4 million and $5.2 million during the years ended December 31,
2004 and 2003, respectively. The increase in 2004 resulted primarily from an increase in pre-tax income.



RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002



NET INCOME



Net income increased by $658,000 or 9.24% to $7.8 million during the year ended December 31, 2003 compared to $7.1 million for the year ended December 31, 2002. The
increase in net income during the 2003 period was primarily due to decreases in total interest expense of $1.9 million and provision for loan losses of $550,000, which more than offset decreases in total interest income of $1.3 million and
non-interest income of $11,000, along with increases in non-interest expense of $18,000 and income taxes of $417,000.



INTEREST INCOME



Interest income on loans during the year ended December 31, 2003 decreased by $3.2 million or 10.92% to $26.1 million when compared to $29.3 million during 2002. During
the years ended December 31, 2003 and 2002, the yield earned on the loan portfolio was 6.94% and 7.61%, respectively. The average balance of loans outstanding during the years ended December 31, 2003 and 2002, totaled $376.0 million and $384.7
million, respectively.



Interest on mortgage-backed securities increased $1.8
million or 23.08% during the year ended December 31, 2003 to $9.6 million compared to $7.8 million for 2002. During the years ended December 31, 2003 and 2002, the average balance of mortgage-backed securities totaled $199.6 million and $127.7
million, respectively, resulting in a net increase of $71.9 million or 56.30%. The yield earned on the mortgage-backed securities portfolio was 4.80% and 6.08% during 2003 and 2002, respectively. Interest earned on investment securities increased by
$219,000 or 42.28% to $737,000 for the year ended December 31, 2003, when compared to $518,000 for 2002. The increase during the year ended December 31, 2003, resulted from an increase of $3.3 million or 45.83% in the average balance of the
investment securities portfolio, sufficient to offset a decrease of twenty-three basis points in the yield earned on the investment securities portfolio from 7.23% in 2002 to 7.00% in 2003.



Interest on other interest-earning assets amounted to $346,000 and $508,000 during the years
ended December 31, 2003 and 2002, respectively. The average balance of other interest-earning assets outstanding decreased $7.0 million or 27.45% to $18.5 million in 2003 from $25.5 million in 2002, along with a decrease of twelve basis points in
the yield earned on other interest-earning assets to 1.87% in 2003 from 1.99% in 2002.



INTEREST EXPENSE



Interest on deposits decreased $1.8 million or 15.65% to $9.7 million during the year ended December 31, 2003 compared to $11.5 million for 2002. The decrease during 2003
was attributable to a decrease of sixty-nine basis points in the Banks average cost of interest-bearing deposits to 2.17% for 2003 from 2.86% for 2002, partially offset by an increase of $44.3 million or 11.04% in the average balance of
interest-bearing deposits outstanding.



Interest on advances and other borrowed
money decreased $65,000 or 1.71% to $3.7 million during the year ended December 31, 2003 compared to $3.8 million for 2002. The decrease during 2003 was attributable to a decrease of eighty-nine basis points in the Banks cost of borrowings
from 5.04% for 2002 to 4.15% for 2003, sufficient to offset an increase of $14.7 million or 19.47% in the average balance of advances and other borrowed money from $75.5 million in 2002 to $90.2 million in 2003.



NET INTEREST INCOME



Net interest income for the year ended December 31, 2003, increased $554,000 or 2.43% to
$23.3 million for 2003 as compared to $22.8 million for 2002. The Banks net interest rate spread decreased from 3.77% in 2002 to 3.57% in 2003 and its interest rate margin decreased from 4.18% in 2002 to 3.86% in 2003. The decrease in net
interest rate spread primarily resulted from a ninety basis point decrease in the yield of interest-earning assets from 6.98% in 2002 to 6.08% in 2003, sufficient to offset a seventy basis point decrease in the cost of average interest-bearing
liabilities from 3.21% in 2002 to 2.51% in 2003.



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



Managements Discussion and Analysis of Financial
Condition and Results of Operations (continued)



PROVISION FOR LOAN LOSSES



During the years ended December 31, 2003 and 2002, the Bank provided $84,000 and $634,000,
respectively, for loan losses. At December 31, 2003 and 2002, the Banks loan portfolio included loans totaling $1.6 million and $2.7 million, respectively, which were delinquent ninety days or more. The Bank maintains an allowance for loan
losses based on managements evaluation of the risk inherent in its loan portfolio, which gives due consideration to changes in general market conditions and in the nature and volume of the Banks loan activity. The allowance for loan
losses amounted to $2.52 million at December 31, 2003, representing .65% of total loans and 161.53% of loans delinquent ninety days or more compared to an allowance of $2.55 mill i on at December 31, 2002, representing .65% of total loans and 94.41%
of loans delinquent ninety days or more . During the years ended December 31, 2003 and 2002, the Bank charged off loans aggregating $126,000 and $244,000, respectively. The Bank monitors its loans portfolio and intends to continue to provide for
loan losses based on its on going periodic review of the loan portfolio and general market conditions.



NON-INTEREST INCOME



Non-interest income decreased by $11,000 or 0.43% to $2.56 million during the year ended December 31, 2003 as compared to $2.57 million for 2002. The increase in
non-interest income during 2003 resulted primarily from a decrease in the gain on sale of branches of $479,000, sufficient to offset increases in fees and service charges of $179,000, gain on sale of investment in real estate of $42,000, and
miscellaneous income of $246,000. During the year ended December 31, 2002, the Bank sold deposits of $21.8 million, furniture, fixtures and leasehold improvements of $221,000 and account loans of $148,000 at its two Brick, New Jersey, branch offices
to another financial institution. As a result of the sale, the Bank recognized a net gain of $479,000.



NON-INTEREST EXPENSES



Non-interest expenses increased $18,000 to $12.81 million during the year ended December 31, 2003 compared to $12.79 million for 2002. Salaries and employee benefits,
occupancy and advertising decreased $467,000, $51,000 and $36,000, respectively, during the year ended December 31, 2003, which were more than offset by increases in equipment and miscellaneous expenses of $87,000 and $486,000, respectively.



INCOME TAXES



Income tax expense totaled $5.2 million and $4.8 million during the years ended December 31,
2003 and 2002, respectively. The increase in 2003 resulted primarily from an increase in pre-tax income of $1.1 million.



LIQUIDITY AND CAPITAL RESOURCES



The Banks primary sources of funds are deposits, amortization and prepayments of loan and mortgage-backed securities principal, FHLB-NY advances, maturities of
investment securities and funds provided from operations. While scheduled loan and mortgage-backed securities amortization and maturities of investment securities are a relatively predictable source of funds, deposit flows and loan and
mortgage-backed securities prepayments are greatly influenced by market interest rates, economic conditions and competition.



The Bank is required to maintain sufficient liquidity to ensure its safe and sound operation by the Office of Thrift Supervision (OTS) regulations. The Bank
adjusts its liquidity levels in order to meet funding needs for deposit outflows, payments of real estate taxes from escrow accounts on mortgage loans, repayment of borrowings, when applicable, and loan funding commitments. The Bank also adjusts its
liquidity level as appropriate to meet its asset/liability objectives. In addition, the Bank invests its excess funds in federal funds and interest-bearing deposits with the FHLB-NY, which provides liquidity to meet lending requirements.



The Banks liquidity, represented by cash and cash equivalents, is a product of its
operating, investing and financing activities. Cash was generated by operating activities in each of the above periods. The primary source of cash from operating activities during each period was net income.



The primary sources of investing activities of the Bank are lending and investment in
mortgage-backed securities. In addition to funding new loan production and the purchase of mortgage-backed securities through operations and financing activities, new loan production and purchases of mortgage-backed securities were also funded by
principal repayments on existing loans and mortgage-backed securities.



Liquidity management is both a daily and long-term function of business management. Excess liquidity is generally invested in short-term investments, such as federal funds and interest-bearing deposits. If the Bank requires funds beyond its
ability to generate them internally, borrowing agreements exist with the FHLB-NY, which provide an additional source of funds. At December 31, 2004 and 2003, advances from the FHLB-NY amounted to $89.0 million and $87.0 million, respectively.



The Bank anticipates that it will have sufficient funds available to meet its
current loan commitments. At December 31, 2004, the Bank had outstanding commitments to originate loans and fund unused credit lines of $26.3 million. Certificates of deposit scheduled to mature in one year or less, at December 31, 2004, totaled
$158.9 million . Management believes that, based upon historical experience, a significant portion of such deposits will remain with the Bank.



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



At December 31, 2004, the Bank exceeded each of the three OTS capital requirements. The Banks tangible, core
and risk-based capital ratios were 7.92%, 7.92% and 15.89%, respectively. The Bank was categorized as well-capitalized under the prompt corrective action regulations of the OTS.



CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS



The following table sets forth the Banks contractual obligations and commercial
commitments at December 31, 2004:



|                        |  |                |         |                       |   |           |  |           |        |                  |   |        |  |   |       
|----------------------- |  | -------------- | ------- | --------------------- | - | --------- |  | --------- | ------ | ---------------- | - | ------ |  | - | ------
|                        |  |                |         | Payment Due By Period
|Contractual Obligations |  | Total          |         | Less Than1 Year       |   | 1-3 Years |  | 3-5 Years |        | More Than5 Years
|                        |  | (In Thousands)
|FLHB-NY advances        |  | $              | 89,000  |                       | $ | 20,000    |  | $         | 47,000 |                  | $ | 12,000 |  | $ | 10,000
|Other borrowings        |  |                | 84      |                       |   | 37        |  |           | 47     |                  |   |       |  |   |      
|Certificates of deposit |  |                | 203,172 |                       |   | 158,927   |  | $         | 37,583 |                  | $ | 6,662  |  |   |      
|Lease obligations       |  |                | 2,128   |                       |   | 300       |  |           | 799    |                  |   | 473    |  |   | 556   
|                        |  |                |         |                       |   |           |  |           |        |                  |   |        |  |   |       
|                        |  | $              | 294,384 |                       | $ | 179,264   |  | $         | 85,429 |                  | $ | 19,135 |  | $ | 10,556
|                        |  |                |         |                       |   |           |  |           |        |                  |   |        |  |   |       



In the normal course of business, the
Bank enters into off-balance sheet arrangements consisting of commitments to fund mortgage loans and lines of credit secured by real estate. The following table presents these off-balance sheet arrangements at December 31, 2004.



For more information regarding these commitments, see note 14 of the Notes to Consolidated
Financial Statements.



|                               |  |                |        |                                 |   |           |  |           |   |                  |   |   |  |   |  
|------------------------------ |  | -------------- | ------ | ------------------------------- | - | --------- |  | --------- | - | ---------------- | - | - |  | - | -
|                               |  |                |        | Commitment Expiration By Period
|Off-Balance Sheet Arrangements |  | Total          |        | Less Than1 Year                 |   | 1-3 Years |  | 3-5 Years |   | More Than5 Years
|                               |  | (In Thousands)
|To originate loans             |  | $              | 16,816 |                                 | $ | 16,816    |  | $         |  |                  | $ |  |  | $ | 
|Unused lines of credit         |  | $              | 9,527  |                                 | $ | 9,527     |  |           |  |                  |   |  |  |   | 
|                               |  |                |        |                                 |   |           |  |           |   |                  |   |   |  |   |  
|                               |  | $              | 26,343 |                                 | $ | 26,343    |  |           |  |                  |   |  |  |   | 
|                               |  |                |        |                                 |   |           |  |           |   |                  |   |   |  |   |  



IMPACT OF INFLATION AND CHANGING
PRICES



The consolidated financial statements and the related data
presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America, which require the measurement of financial position and operating results in terms of historical dollars, without
considering changes in the relative purchasing power of money over time due to inflation.



Unlike most industrial companies, virtually all of the assets and liabilities of the Bank are monetary in nature. As a result, interest rates have a more significant impact on the Banks performance than the
effects of general levels of inflation. Interest rates do not necessarily move in the same direction or in the same magnitude as the prices of goods and services because such prices are affected by inflation to a larger extent than interest rates.



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



Consolidated Statements of Financial Condition



|                                                                                                                                                     |  |               |  |              |             |   |      |   |             |  
|---------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- |  | ------------ | ----------- | - | ---- | - | ----------- | -
|                                                                                                                                                     |  |               |  | December 31, |            
|                                                                                                                                                     |  | Note(s)       |  | 2003         |             |   | 2004 |  
|Assets                                                                                                                                               |  |               |  |              |             |   |      |   |             |  
|Cash and amounts due from depository institutions                                                                                                    |  |               |  | $            | 5,929,784   |   |      | $ | 5,020,137   |  
|Interest bearing deposits in other banks                                                                                                             |  |               |  |              | 4,196,698   |   |      |   | 9,578,574   |  
|                                                                                                                                                     |  |               |  |              |             |   |      |   |             |  
|Total cash and cash equivalents                                                                                                                      |  | 1 and 15      |  |              | 10,126,482  |   |      |   | 14,598,711  |  
|Securities available for sale                                                                                                                        |  | 1,2,9 and 15  |  |              | 3,921,902   |   |      |   | 3,639,182   |  
|Investment securities held to maturity                                                                                                               |  | 1,3,9 and 15  |  |              | 9,422,111   |   |      |   | 9,308,686   |  
|Mortgage-backed securities held to maturity                                                                                                          |  | 1,4,9 and 15  |  |              | 218,418,340 |   |      |   | 200,077,102 |  
|Loans receivable                                                                                                                                     |  | 1,5,9 and 15  |  |              | 378,640,773 |   |      |   | 395,800,481 |  
|Investment in real estate                                                                                                                            |  | 1             |  |              | 129,640     |   |      |   |            |  
|Premises and equipment                                                                                                                               |  | 1,6 and 10    |  |              | 4,092,683   |   |      |   | 4,018,500   |  
|Federal Home Loan Bank of New York stock                                                                                                             |  | 9             |  |              | 4,743,900   |   |      |   | 5,151,900   |  
|Interest receivable                                                                                                                                  |  | 1,7 and 15    |  |              | 2,838,497   |   |      |   | 2,702,532   |  
|Deferred tax asset                                                                                                                                   |  | 1 and 13      |  |              | 843,543     |   |      |   | 940,281     |  
|Other assets                                                                                                                                         |  | 12            |  |              | 3,717,310   |   |      |   | 3,661,297   |  
|                                                                                                                                                     |  |               |  |              |             |   |      |   |             |  
|Total assets                                                                                                                                         |  |               |  | $            | 636,895,181 |   |      | $ | 639,898,672 |  
|                                                                                                                                                     |  |               |  |              |             |   |      |   |             |  
|Liabilities and stockholders equity                                                                                                                 |  |               |  |              |             |   |      |   |             |  
|Liabilities                                                                                                                                          |  |               |  |              |             |   |      |   |             |  
|Deposits                                                                                                                                             |  | 8 and 15      |  | $            | 492,160,765 |   |      | $ | 489,349,688 |  
|Advances from Federal Home Loan Bank of New York                                                                                                     |  | 9 and 15      |  |              | 87,000,000  |   |      |   | 89,000,000  |  
|Other borrowed money                                                                                                                                 |  | 10 and 15     |  |              | 117,748     |   |      |   | 83,722      |  
|Advance payments by borrowers for taxes and insurance                                                                                                |  |               |  |              | 3,495,739   |   |      |   | 3,336,744   |  
|Other liabilities                                                                                                                                    |  | 12            |  |              | 2,797,586   |   |      |   | 3,014,303   |  
|                                                                                                                                                     |  |               |  |              |             |   |      |   |             |  
|Total liabilities                                                                                                                                    |  |               |  |              | 585,571,838 |   |      |   | 584,784,457 |  
|                                                                                                                                                     |  |               |  |              |             |   |      |   |             |  
|Commitment and contingencies                                                                                                                         |  | 14 and 15     |  |              |            |   |      |   |            |  
|Stockholders equity                                                                                                                                 |  | 1, 11, and 13 |  |              |             |   |      |   |             |  
|Preferred stock; authorized 3,000,000 shares; issued and outstanding  none                                                                          |  |               |  |              |            |   |      |   |            |  
|Common stock; par value $.01; 25,000,000 shares authorized; 6,900,000 shares issued; 4,974,313 shares (2003) and 4,974,913 shares (2004)
outstanding |  |               |  |              | 69,000      |   |      |   | 69,000      |  
|Paid-in capital in excess of par value                                                                                                               |  |               |  |              | 18,957,298  |   |      |   | 19,041,357  |  
|Retained earnings - substantially restricted                                                                                                         |  |               |  |              | 54,621,926  |   |      |   | 58,387,028  |  
|Accumulated other comprehensive income  Unrealized gain on securities available for sale, net of income tax                                         |  |               |  |              | 243,170     |   |      |   | 315,468     |  
|Treasury stock, at cost; 1,925,687 shares (2003) and 1,925,087 shares (2004)                                                                         |  |               |  |              | (22,568,051 | ) |      |   | (22,698,638 | )
|                                                                                                                                                     |  |               |  |              |             |   |      |   |             |  
|Total stockholders equity                                                                                                                           |  |               |  |              | 51,323,343  |   |      |   | 55,114,215  |  
|                                                                                                                                                     |  |               |  |              |             |   |      |   |             |  
|Total liabilities and stockholders equity                                                                                                           |  |               |  | $            | 636,895,181 |   |      | $ | 639,898,672 |  
|                                                                                                                                                     |  |               |  |              |             |   |      |   |             |  



See notes to
consolidated financial statements.



|   |  |                       
|-- |  | ----------------------
|14 |  | PAMRAPO BANCORP  2004



---

PAMRAPO BANCORP, INC. AND SUBSIDIARIES



Consolidated Statements of Income



|                                                      |  |          |  |                         |            |      |   |            |  |   |           
|----------------------------------------------------- |  | -------- |  | ----------------------- | ---------- | ---- | - | ---------- |  | - | ----------
|                                                      |  |          |  | Year Ended December 31,
|                                                      |  | Note(s)  |  | 2002                    |            | 2003 |   | 2004      
|Interest income:                                      |  |          |  |                         |            |      |   |            |  |   |           
|Loans                                                 |  | 1 and 5  |  | $                       | 29,266,901 |      | $ | 26,102,108 |  | $ | 24,861,002
|Mortgage-backed securities                            |  | 1        |  |                         | 7,764,545  |      |   | 9,570,040  |  |   | 10,091,066
|Investments                                           |  | 1        |  |                         | 518,481    |      |   | 737,285    |  |   | 844,704   
|Other interest-earning assets                         |  |          |  |                         | 508,158    |      |   | 346,011    |  |   | 186,577   
|                                                      |  |          |  |                         |            |      |   |            |  |   |           
|Total interest income                                 |  |          |  |                         | 38,058,085 |      |   | 36,755,444 |  |   | 35,983,349
|                                                      |  |          |  |                         |            |      |   |            |  |   |           
|Interest expense:                                     |  |          |  |                         |            |      |   |            |  |   |           
|Deposits                                              |  | 8        |  |                         | 11,482,660 |      |   | 9,691,521  |  |   | 8,121,943 
|Advances and other borrowed money                     |  |          |  |                         | 3,807,006  |      |   | 3,741,656  |  |   | 3,269,682 
|                                                      |  |          |  |                         |            |      |   |            |  |   |           
|Total interest expense                                |  |          |  |                         | 15,289,666 |      |   | 13,433,177 |  |   | 11,391,625
|                                                      |  |          |  |                         |            |      |   |            |  |   |           
|Net interest income                                   |  |          |  |                         | 22,768,419 |      |   | 23,322,267 |  |   | 24,591,724
|Provision for loan losses                             |  | 1 and 5  |  |                         | 634,090    |      |   | 83,777     |  |   | 82,051    
|                                                      |  |          |  |                         |            |      |   |            |  |   |           
|Net interest income after provision for loan losses   |  |          |  |                         | 22,134,329 |      |   | 23,238,490 |  |   | 24,509,673
|                                                      |  |          |  |                         |            |      |   |            |  |   |           
|Non-interest income:                                  |  |          |  |                         |            |      |   |            |  |   |           
|Fees and service charges                              |  |          |  |                         | 1,285,725  |      |   | 1,464,683  |  |   | 1,294,644 
|Gain on sale of branches                              |  |          |  |                         | 478,563    |      |   |           |  |   |          
|Gain on sale of investment in real estate             |  |          |  |                         |           |      |   | 42,230     |  |   | 169,869   
|Miscellaneous                                         |  |          |  |                         | 801,605    |      |   | 1,047,671  |  |   | 1,134,395 
|                                                      |  |          |  |                         |            |      |   |            |  |   |           
|Total non-interest income                             |  |          |  |                         | 2,565,893  |      |   | 2,554,584  |  |   | 2,598,908 
|                                                      |  |          |  |                         |            |      |   |            |  |   |           
|Non-interest expenses:                                |  |          |  |                         |            |      |   |            |  |   |           
|Salaries and employee benefits                        |  | 12       |  |                         | 7,234,261  |      |   | 6,767,218  |  |   | 7,700,570 
|Net occupancy expense of premises                     |  | 6 and 14 |  |                         | 1,085,575  |      |   | 1,034,747  |  |   | 1,001,576 
|Equipment                                             |  | 6        |  |                         | 1,282,556  |      |   | 1,369,764  |  |   | 1,340,958 
|Advertising                                           |  |          |  |                         | 181,207    |      |   | 144,744    |  |   | 219,516   
|Federal insurance premium                             |  |          |  |                         | 73,019     |      |   | 72,599     |  |   | 73,478    
|Miscellaneous                                         |  |          |  |                         | 2,933,980  |      |   | 3,420,331  |  |   | 3,456,156 
|                                                      |  |          |  |                         |            |      |   |            |  |   |           
|Total non-interest expenses                           |  |          |  |                         | 12,790,598 |      |   | 12,809,403 |  |   | 13,792,254
|                                                      |  |          |  |                         |            |      |   |            |  |   |           
|Income before income taxes                            |  |          |  |                         | 11,909,624 |      |   | 12,983,671 |  |   | 13,316,327
|Income taxes                                          |  | 1 and 13 |  |                         | 4,786,232  |      |   | 5,202,845  |  |   | 5,372,549 
|                                                      |  |          |  |                         |            |      |   |            |  |   |           
|Net income                                            |  | 1        |  | $                       | 7,123,392  |      | $ | 7,780,826  |  | $ | 7,943,778 
|                                                      |  |          |  |                         |            |      |   |            |  |   |           
|Net income per common share:                          |  | 1        |  |                         |            |      |   |            |  |   |           
|Basic                                                 |  |          |  | $                       | 1.39       |      | $ | 1.54       |  | $ | 1.60      
|                                                      |  |          |  |                         |            |      |   |            |  |   |           
|Diluted                                               |  |          |  | $                       | 1.39       |      | $ | 1.54       |  | $ | 1.59      
|                                                      |  |          |  |                         |            |      |   |            |  |   |           
|Weighted average number of common shares outstanding: |  | 1        |  |                         |            |      |   |            |  |   |           
|Basic                                                 |  |          |  |                         | 5,141,486  |      |   | 5,055,816  |  |   | 4,974,783 
|                                                      |  |          |  |                         |            |      |   |            |  |   |           
|Diluted                                               |  |          |  |                         | 5,141,486  |      |   | 5,061,471  |  |   | 4,995,050 
|                                                      |  |          |  |                         |            |      |   |            |  |   |           
|Dividends per common share                            |  | 1        |  | $                       | 0.75       |      | $ | 0.80       |  | $ | 0.84      
|                                                      |  |          |  |                         |            |      |   |            |  |   |           



See notes to
consolidated financial statements.



|                |  |   
|--------------- |  | --
|www.pamrapo.com |  | 15



---

PAMRAPO BANCORP, INC. AND SUBSIDIARIES



Consolidated Statements of Comprehensive Income



|                                                               |  |                         |           |   |      |   |           |      |  |   |           |  
|-------------------------------------------------------------- |  | ----------------------- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                                               |  | Year Ended December 31, |          
|                                                               |  | 2002                    |           |   | 2003 |   |           | 2004 | 
|Net income                                                     |  | $                       | 7,123,392 |   |      | $ | 7,780,826 |      |  | $ | 7,943,778 |  
|                                                               |  |                         |           |   |      |   |           |      |  |   |           |  
|Other comprehensive income, net of income taxes:               |  |                         |           |   |      |   |           |      |  |   |           |  
|Gross unrealized holding gain on securities available for sale |  |                         | 97,762    |   |      |   | 1,024     |      |  |   | 120,498   |  
|Deferred income taxes                                          |  |                         | (51,000   | ) |      |   | (400      | )    |  |   | (48,200   | )
|                                                               |  |                         |           |   |      |   |           |      |  |   |           |  
|Other comprehensive income                                     |  |                         | 46,762    |   |      |   | 624       |      |  |   | 72,298    |  
|                                                               |  |                         |           |   |      |   |           |      |  |   |           |  
|Comprehensive income                                           |  | $                       | 7,170,154 |   |      | $ | 7,781,450 |      |  | $ | 8,016,076 |  
|                                                               |  |                         |           |   |      |   |           |      |  |   |           |  



See notes to
consolidated financial statements.



|   |  |                        
|-- |  | -----------------------
|16 |  | PAMRAPO BAN CORP  2004



---

PAMRAPO BANCORP, INC. AND SUBSIDIARIES



Consolidated Statements of Changes in Stockholders
Equity



|                                                                      |  |             |        |                                     |   |            |                                           |  |   |                                     |   |                |   |         |       |   |             |   |  |   |            |  
|--------------------------------------------------------------------- |  | ----------- | ------ | ----------------------------------- | - | ---------- | ----------------------------------------- |  | - | ----------------------------------- | - | -------------- | - | ------- | ----- | - | ----------- | - |  | - | ---------- | -
|                                                                      |  | CommonStock |        | Paid-inCapital inExcess of ParValue |   |            | RetainedEarnings -SubstantiallyRestricted |  |   | AccumulatedOtherComprehensiveIncome |   | Treasury Stock |   |         | Total |  
|Balance - December 31, 2001                                           |  | $           | 34,500 |                                     | $ | 18,906,768 |                                           |  | $ | 47,621,056                          |   |                | $ | 195,784 |       | $ | (19,234,933 | ) |  | $ | 47,523,175 |  
|Net income for the year ended December 31, 2002                       |  |             |       |                                     |   |           |                                           |  |   | 7,123,392                           |   |                |   |        |       |   |            |   |  |   | 7,123,392  |  
|Stock split                                                           |  |             | 34,500 |                                     |   | (34,500    | )                                         |  |   |                                    |   |                |   |        |       |   |            |   |  |   |           |  
|Purchase of treasury stock                                            |  |             |       |                                     |   |           |                                           |  |   |                                    |   |                |   |        |       |   | (279,328    | ) |  |   | (279,328   | )
|Reissuance of treasury stock                                          |  |             |       |                                     |   | 64,900     |                                           |  |   |                                    |   |                |   |        |       |   | 132,600     |   |  |   | 197,500    |  
|Unrealized gain on securities available for sale, net of income taxes |  |             |       |                                     |   |           |                                           |  |   |                                    |   |                |   | 46,762  |       |   |            |   |  |   | 46,762     |  
|Cash dividends                                                        |  |             |       |                                     |   |           |                                           |  |   | (3,855,228                          | ) |                |   |        |       |   |            |   |  |   | (3,855,228 | )
|                                                                      |  |             |        |                                     |   |            |                                           |  |   |                                     |   |                |   |         |       |   |             |   |  |   |            |  
|Balance - December 31, 2002                                           |  |             | 69,000 |                                     |   | 18,937,168 |                                           |  |   | 50,889,220                          |   |                |   | 242,546 |       |   | (19,381,661 | ) |  |   | 50,756,273 |  
|Net income for the year ended December 31, 2003                       |  |             |       |                                     |   |           |                                           |  |   | 7,780,826                           |   |                |   |        |       |   |            |   |  |   | 7,780,826  |  
|Purchase of treasury stock                                            |  |             |       |                                     |   |           |                                           |  |   |                                    |   |                |   |        |       |   | (3,221,490  | ) |  |   | (3,221,490 | )
|Sale of treasury stock                                                |  |             |       |                                     |   | 20,130     |                                           |  |   |                                    |   |                |   |        |       |   | 35,100      |   |  |   | 55,230     |  
|Unrealized gain on securities available for sale, net of income taxes |  |             |       |                                     |   |           |                                           |  |   |                                    |   |                |   | 624     |       |   |            |   |  |   | 624        |  
|Cash dividends                                                        |  |             |       |                                     |   |           |                                           |  |   | (4,048,120                          | ) |                |   |        |       |   |            |   |  |   | (4,048,120 | )
|                                                                      |  |             |        |                                     |   |            |                                           |  |   |                                     |   |                |   |         |       |   |             |   |  |   |            |  
|Balance - December 31, 2003                                           |  |             | 69,000 |                                     |   | 18,957,298 |                                           |  |   | 54,621,926                          |   |                |   | 243,170 |       |   | (22,568,051 | ) |  |   | 51,323,343 |  
|Net income for the year ended December 31, 2004                       |  |             |       |                                     |   |           |                                           |  |   | 7,943,778                           |   |                |   |        |       |   |            |   |  |   | 7,943,778  |  
|Purchase of treasury stock                                            |  |             |       |                                     |   |           |                                           |  |   |                                    |   |                |   |        |       |   | (271,823    | ) |  |   | (271,823   | )
|Sale of treasury stock                                                |  |             |       |                                     |   | 76,263     |                                           |  |   |                                    |   |                |   |        |       |   | 134,182     |   |  |   | 210,445    |  
|Award of treasury stock                                               |  |             |       |                                     |   | 7,796      |                                           |  |   |                                    |   |                |   |        |       |   | 7,054       |   |  |   | 14,850     |  
|Unrealized gain on securities available for sale, net of income taxes |  |             |       |                                     |   |           |                                           |  |   |                                    |   |                |   | 72,298  |       |   |            |   |  |   | 72,298     |  
|Cash dividends                                                        |  |             |       |                                     |   |           |                                           |  |   | (4,178,676                          | ) |                |   |        |       |   |            |   |  |   | (4,178,676 | )
|                                                                      |  |             |        |                                     |   |            |                                           |  |   |                                     |   |                |   |         |       |   |             |   |  |   |            |  
|Balance - December 31, 2004                                           |  | $           | 69,000 |                                     | $ | 19,041,357 |                                           |  | $ | 58,387,028                          |   |                | $ | 315,468 |       | $ | (22,698,638 | ) |  | $ | 55,114,215 |  
|                                                                      |  |             |        |                                     |   |            |                                           |  |   |                                     |   |                |   |         |       |   |             |   |  |   |            |  



See notes to
consolidated financial statements.



|                |  |   
|--------------- |  | --
|www.pamrapo.com |  | 17



---

PAMRAPO BANCORP, INC. AND SUBSIDIARIES



Consolidated Statements of Cash Flows



|                                                                                  |  |                         |             |   |      |   |              |      |  |   |             |  
|--------------------------------------------------------------------------------- |  | ----------------------- | ----------- | - | ---- | - | ------------ | ---- |  | - | ----------- | -
|                                                                                  |  | Year Ended December 31, |            
|                                                                                  |  | 2002                    |             |   | 2003 |   |              | 2004 | 
|Cash flows from operating activities:                                             |  |                         |             |   |      |   |              |      |  |   |             |  
|Net income                                                                        |  | $                       | 7,123,392   |   |      | $ | 7,780,826    |      |  | $ | 7,943,778   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                         |             |   |      |   |              |      |  |   |             |  
|Depreciation of premises and equipment and investment in real estate              |  |                         | 619,262     |   |      |   | 553,622      |      |  |   | 533,648     |  
|Amortization of deferred fees, premiums and discounts, net                        |  |                         | 128,086     |   |      |   | 1,037,197    |      |  |   | 588,451     |  
|Provision for loan losses                                                         |  |                         | 634,090     |   |      |   | 83,777       |      |  |   | 82,051      |  
|(Gain) on sale of loans                                                           |  |                         |            |   |      |   |             |      |  |   | (8,611      | )
|(Gain) on sales of foreclosed real estate                                         |  |                         | (8,349      | ) |      |   | (17,362      | )    |  |   |            |  
|(Gain) on sale of real estate held for investment                                 |  |                         |            |   |      |   | (42,230      | )    |  |   | (169,869    | )
|(Gain) on sale of branches                                                        |  |                         | (478,563    | ) |      |   |             |      |  |   |            |  
|Deferred income taxes                                                             |  |                         | 391,008     |   |      |   | (64,549      | )    |  |   | (144,938    | )
|(Increase) decrease in interest receivable                                        |  |                         | (38,089     | ) |      |   | 143,818      |      |  |   | 135,965     |  
|(Increase) decrease in other assets                                               |  |                         | (2,477,357  | ) |      |   | 492,150      |      |  |   | 56,013      |  
|(Decrease) increase in other liabilities                                          |  |                         | (423,935    | ) |      |   | (1,272,643   | )    |  |   | 216,717     |  
|Distribution of treasury stock                                                    |  |                         | 197,500     |   |      |   |             |      |  |   | 14,850      |  
|                                                                                  |  |                         |             |   |      |   |              |      |  |   |             |  
|Net cash provided by operating activities                                         |  |                         | 5,667,045   |   |      |   | 8,694,606    |      |  |   | 9,248,055   |  
|                                                                                  |  |                         |             |   |      |   |              |      |  |   |             |  
|Cash flows from investing activities:                                             |  |                         |             |   |      |   |              |      |  |   |             |  
|Principal repayments on securities available for sale                             |  |                         | 895,307     |   |      |   | 651,692      |      |  |   | 438,179     |  
|Purchases of securities available for sale                                        |  |                         | (43,590     | ) |      |   | (31,692      | )    |  |   | (34,961     | )
|Purchases of investment securities held to maturity                               |  |                         | (4,110,600  | ) |      |   | (2,388,040   | )    |  |   |            |  
|Proceeds from calls of investment securities held to maturity                     |  |                         | 2,000,000   |   |      |   |             |      |  |   |            |  
|Principal repayments on mortgage-backed securities held to maturity               |  |                         | 44,499,307  |   |      |   | 87,887,524   |      |  |   | 52,408,257  |  
|Purchases of mortgage-backed securities held to maturity                          |  |                         | (68,421,533 | ) |      |   | (160,853,754 | )    |  |   | (34,331,420 | )
|Proceeds from sale of loans                                                       |  |                         | 147,950     |   |      |   |             |      |  |   | 523,817     |  
|Net change in loans receivable                                                    |  |                         | (21,311,805 | ) |      |   | 10,851,961   |      |  |   | (17,727,590 | )
|Proceeds from sale of foreclosed real estate                                      |  |                         | 91,150      |   |      |   | 172,702      |      |  |   |            |  
|Additions to premises and equipment and investment in real estate                 |  |                         | (413,813    | ) |      |   | (225,433     | )    |  |   | (453,941    | )
|Proceeds from sale of investment in real estate                                   |  |                         |            |   |      |   | 122,600      |      |  |   | 53,985      |  
|Proceeds from sale of premises and equipment                                      |  |                         | 221,437     |   |      |   |             |      |  |   |            |  
|Purchase of Federal Home Loan Bank of New York stock                              |  |                         | (607,300    | ) |      |   | (340,500     | )    |  |   | (408,000    | )
|                                                                                  |  |                         |             |   |      |   |              |      |  |   |             |  
|Net cash (used in) provided by investing activities                               |  |                         | (47,053,490 | ) |      |   | (64,152,940  | )    |  |   | 468,326     |  
|                                                                                  |  |                         |             |   |      |   |              |      |  |   |             |  



|   |  |                       
|-- |  | ----------------------
|18 |  | PAMRAPO BANCORP  2004



---

PAMRAPO BANCORP, INC. AND SUBSIDIARIES



Consolidated Statements of Cash Flows (continued)



|                                                                         |  |                         |             |   |      |   |             |      |  |   |             |  
|------------------------------------------------------------------------ |  | ----------------------- | ----------- | - | ---- | - | ----------- | ---- |  | - | ----------- | -
|                                                                         |  | Year Ended December 31, |            
|                                                                         |  | 2002                    |             |   | 2003 |   |             | 2004 | 
|Cash flows from financing activities:                                    |  |                         |             |   |      |   |             |      |  |   |             |  
|Net increase (decrease) in deposits                                      |  | $                       | 50,726,043  |   |      | $ | 46,653,350  |      |  | $ | (2,811,077  | )
|Cash paid for sale of deposits                                           |  |                         | (21,326,860 | ) |      |   |            |      |  |   |            |  
|Advances from Federal Home Loan Bank of New York                         |  |                         | 25,000,000  |   |      |   | 33,000,000  |      |  |   | 19,000,000  |  
|Repayment of Advances from Federal Home Loan Bank of New York            |  |                         | (8,000,000  | ) |      |   | (30,340,000 | )    |  |   | (17,000,000 | )
|Net (decrease) in other borrowed money                                   |  |                         | (29,010     | ) |      |   | (31,418     | )    |  |   | (34,026     | )
|Net increase (decrease) in payments by borrowers for taxes and insurance |  |                         | 319,330     |   |      |   | (340,123    | )    |  |   | (158,995    | )
|Cash dividends paid                                                      |  |                         | (3,855,228  | ) |      |   | (4,048,120  | )    |  |   | (4,178,676  | )
|Sale of treasury stock                                                   |  |                         |            |   |      |   | 55,230      |      |  |   | 210,445     |  
|Purchase of treasury stock                                               |  |                         | (279,328    | ) |      |   | (3,221,490  | )    |  |   | (271,823    | )
|                                                                         |  |                         |             |   |      |   |             |      |  |   |             |  
|Net cash provided by (used in) financing activities                      |  |                         | 42,554,947  |   |      |   | 41,727,429  |      |  |   | (5,244,152  | )
|                                                                         |  |                         |             |   |      |   |             |      |  |   |             |  
|Net increase (decrease) in cash and cash equivalents                     |  |                         | 1,168,502   |   |      |   | (13,730,905 | )    |  |   | 4,472,229   |  
|Cash and cash equivalents - beginning                                    |  |                         | 22,688,885  |   |      |   | 23,857,387  |      |  |   | 10,126,482  |  
|                                                                         |  |                         |             |   |      |   |             |      |  |   |             |  
|Cash and cash equivalents - ending                                       |  | $                       | 23,857,387  |   |      | $ | 10,126,482  |      |  | $ | 14,598,711  |  
|                                                                         |  |                         |             |   |      |   |             |      |  |   |             |  
|Supplemental information:                                                |  |                         |             |   |      |   |             |      |  |   |             |  
|Loan to facilitate sale of investment in real estate                     |  | $                       |            |   |      | $ |            |      |  | $ | 240,000     |  
|                                                                         |  |                         |             |   |      |   |             |      |  |   |             |  
|Cash paid during the period for:                                         |  |                         |             |   |      |   |             |      |  |   |             |  
|Income taxes                                                             |  | $                       | 4,830,190   |   |      | $ | 4,851,141   |      |  | $ | 5,679,241   |  
|                                                                         |  |                         |             |   |      |   |             |      |  |   |             |  
|Interest on deposits and borrowings                                      |  | $                       | 15,348,766  |   |      | $ | 13,514,822  |      |  | $ | 11,245,680  |  
|                                                                         |  |                         |             |   |      |   |             |      |  |   |             |  



See notes to
consolidated financial statements.



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



Notes to Consolidated Financial Statements



1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Basis of consolidated financial statement presentation



The consolidated financial statements include the accounts of the Company,
its wholly owned subsidiary, Pamrapo Savings Bank, S.L.A. (the Bank) and the Banks wholly owned subsidiary, Pamrapo Service Corp., Inc. (the Service Corp.). The Companys business is conducted principally through
the Bank. All significant inter-company accounts and transactions have been eliminated in consolidation.



The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). In preparing the consolidated financial
statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated statement of financial condition and revenues and expenses for the period then ended.
Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant changes relate to the determination of the allowance for loan losses, the assessment of prepayment risks associated
with mortgage-backed securities and the determination of the amount of deferred tax assets which are more likely than not to be realized. Management believes that the allowance for loan losses is adequate, prepayment risks associated with
mortgage-backed securities are properly recognized and all deferred tax assets are more likely than not to be recognized. While management uses available information to recognize losses on loans, future additions to the allowance for loan losses may
be necessary based on changes in economic conditions in the market area. Additionally, assessments of prepayment risks related to mortgage-backed securities are based upon current market conditions, which are subject to frequent change. Finally, the
determination of the amount of deferred tax assets more likely than not to be realized is dependent on projections of future earnings, which are subject to frequent change.



In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Banks allowance
for loan losses. Such agencies may require the Bank to recognize additions to the allowance for loan losses based on their judgments about information available to them at the time of their examination.



Cash and cash equivalents



Cash and cash equivalents include cash and amounts due from depository institutions and
interest-bearing deposits in other banks having original maturities of three months or less.



Investment and mortgage-backed securities



Investments in debt securities that the Company has the positive intent and ability to hold to maturity are classified as held-to-maturity securities and reported at
amortized cost. Debt and equity securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and reported at fair value, with unrealized holding gains and losses included in
earnings. Debt and equity securities not classified as trading securities nor as held-to-maturity securities are classified as available for sale securities and reported at fair value, with unrealized holding gains or losses, net of deferred income
taxes, reported in a separate component of stockholders equity.



Premiums
and discounts on all securities are amortized/accreted using the interest method. Interest and dividend income on securities, which includes amortization of premiums and accretion of discounts, is recognized in the consolidated financial statements
when earned. The adjusted cost basis of an identified security sold or called is used for determining security gains and losses recognized in the consolidated statements of income.



Loans receivable



Loans receivable are stated at unpaid principal balances, less the allowance for loan losses and net deferred loan origination fees and discounts.



The Bank defers loan origination fees and certain direct loan origination costs and
amortizes/ accretes such amounts as an adjustment of yield over the contractual lives of the related loans. Discounts on loans purchased are recognized as income by use of the level-yield method over the terms of the respective loans.



Uncollectible interest on loans is charged off, or an allowance is established based on
managements evaluation. An allowance is established by a charge to interest income equal to all interest previously accrued, and income is subsequently recognized only to the extent that cash payments are received until, in managements
judgment, the borrowers ability to make periodic interest and principal payments is probable, in which case the loan is returned to an accrual status.



Allowance for loan losses



An allowance for loan losses is maintained at a level considered adequate to absorb loan losses. Management of the Bank, in determining the allowance for loan losses,
considers the risks inherent in its loan portfolio and changes in the nature and volume of its loan activities, along with the general economic and real estate market conditions.



The Bank utilizes a two tier approach: (1) identification of impaired loans and the establishment of specific loss allowances, if necessary,
on such loans; and (2) establish-



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



ment of general valuation allowances on the remainder of its loan portfolio. The Bank maintains a loan review system which allows for a periodic review of
its loan portfolio and the early identification of potential impaired loans. Such system takes into consideration, among other things, delinquency status, size of loans, type of collateral and financial condition of the borrowers. Specific loan loss
allowances are established for identified loans based on a review of such information and/or appraisals of the underlying collateral. General loan loss allowances are based upon a combination of factors including, but not limited to, actual loan
loss experience, composition of loan portfolio, current economic conditions and managements judgment.



Although management believes that adequate specific and general loan loss allowances are established, actual losses are dependent upon future events and, as such, further additions to the allowance for loan losses may
be necessary.



An impaired loan is evaluated based on the present value of
expected future cash flows discounted at the loans effective interest rate, or as a practical expedient, at the loans observable market price or the fair value of the collateral if the loan is collateral dependent. A loan evaluated for
impairment is deemed to be impaired when, based on current information and events, it is probable that the Bank will be unable to collect all amounts due according to the contractual terms of the loan agreement. An insignificant payment delay, which
is defined as up to ninety days by the Bank, will not cause a loan to be classified as impaired. A loan is not impaired during a period of delay in payment if the Bank expects to collect all amounts due, including interest accrued at the contractual
interest rate for the period of delay. Thus, a demand loan or other loan with no stated maturity is not impaired if the Bank expects to collect all amounts due, including interest accrued at the contractual interest rate, during the period the loan
is outstanding. All loans identified as impaired are evaluated independently. The Bank does not aggregate such loans for evaluation purposes. Payments received on impaired loans are applied first to accrued interest receivable and then to principal.



Foreclosed real estate and investment in real
estate



Real estate acquired by foreclosure or deed in lieu of foreclosure is
initially recorded at the lower of cost or estimated fair value at date of acquisition and subsequently carried at the lower of such initially recorded amount or estimated fair value less estimated costs to sell. Costs incurred in developing or
preparing properties for sale are capitalized. Expenses of holding properties and income from operating properties are recorded in operations as incurred or earned. Gains and losses from sales of such properties are recognized as incurred.



Real estate held for investment is carried at cost less accumulated
depreciation. Income and expense of operating the property are recorded in operations.



Premises and equipment



Premises and equipment are comprised of land, at cost, and buildings, building improvements, leaseholds and furnishings and equipment, at cost, less accumulated
depreciation and amortization . Significant renewals and betterments are charged to the property and equipment account. Maintenance and repairs are expensed in the year incurred . Rental income is net ted against occupancy expense in the
consolidated statements of income.



Income
taxes



The Company, Bank and Service Corp. file a consolidated federal income
tax return. Income taxes are allocated to the Company, Bank and Service Corp. based on their respective income or loss included in the consolidated income tax return. Separate state income tax returns are filed by the Company, Bank and Service Corp.



Federal and state income taxes have been provided on the basis of reported
income. The amounts reflected on the Companys and subsidiaries tax returns differ from these provisions due principally to temporary differences in the reporting of certain items for financial reporting and income tax reporting purposes.



Deferred income tax expense or benefit is determined by recognizing deferred
tax assets and liabilities for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled . The effect on deferred tax asset s and liabilities of a change in tax rates is
recognized in earnings in the period that includes the enactment date . The realization of deferred tax assets is assessed and a valuation allowance provided, when necessary, for that portion of the asset which is not likely to be realized.
Management believes, based upon current facts, that it is more likely than not that there will be sufficient taxable income in future years to realize the deferred tax assets.



Interest - rate risk



The Bank is principally engaged in the business of attracting deposits from the general public and using these deposits, together with
borrowings and other funds, to invest in securities, to make loans secured by real estate and, to a lesser extent, make consumer loans. The potential for interest-rate risk exists as a result of the generally shorter duration of the Banks
interest-sensitive liabilities compared to the generally longer duration of its interest-sensitive assets. In a rising interest rate environment, liabilities will reprice faster than assets, thereby reducing net interest income. For this reason,
management



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



Notes to Consolidated Financial Statements (continued)



regularly monitors the maturity structure of the Banks assets and liabilities in order to measure its level of interest-rate risk and to plan for
future volatility.



Disclosures about fair
value of financial instruments



The following methods and assumptions were
used in estimating the fair value of its financial instruments:



Cash and cash equivalents and interest receivable: The carrying amounts reported in the consolidated financial statements for cash and cash equivalents and interest receivable approximate their fair values.



Securities: The fair value of securities, as well as commitments to purchase
securities, is determined by reference to quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments.



Loans receivable: Fair value is estimated by discounting the future cash
flows, using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities, of such loans.



Deposits: The carrying amounts reported in the consolidated financial statements for non-interest-bearing demand, NOW, Money
Market, savings and club accounts approximate their fair values. For fixed-maturity certificates of deposit, fair value is estimated using the rates currently offered for deposits of similar remaining maturities.



Advances from Federal Home Loan Bank of New York and other borrowed money:
Fair value is estimated using rates currently offered for liabilities of similar remaining maturities, or when available, quoted market prices.



Commitments to extend credit: The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into
account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates.



Stock - based compensation



The Company, under a plan approved by its stockholders in 2003, has granted stock options to
certain employees. See note 12 for additional information as to option grants. The Company accounts for options granted using the intrinsic value method, in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees, and related interpretations. No compensation expense has been reflected in net income for the options granted as all such grants have an exercise price equal to the market price of the underlying stock at the date of
grant. The following table provides information as to net income and earnings per share as if the Company had applied the fair value recognition provisions of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation, as amended, to all option grants.



|                                                                                                                                                                                           |  |                         |           |   |      |   |           |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------- | --------- | - | ---- | - | --------- | -
|                                                                                                                                                                                           |  | Year Ended December 31, |          
|                                                                                                                                                                                           |  | 2003                    |           |   | 2004 |  
|Net income as reported                                                                                                                                                                     |  | $                       | 7,780,826 |   |      | $ | 7,943,778 |  
|Less: Total stock-based compensation expense, net of income taxes, included in reported net income                                                                                         |  |                         |          |   |      |   |          |  
|Add: Total stock-based compensation expense, net of income taxes, that would have been included in the determination of net income if the fair
value method had been applied to all grants |  |                         | (160,836  | ) |      |   | (253,714  | )
|                                                                                                                                                                                           |  |                         |           |   |      |   |           |  
|Pro forma net income                                                                                                                                                                       |  | $                       | 7,619,990 |   |      | $ | 7,690,064 |  
|                                                                                                                                                                                           |  |                         |           |   |      |   |           |  
|Net income per common share, as reported:                                                                                                                                                  |  |                         |           |   |      |   |           |  
|Basic                                                                                                                                                                                      |  | $                       | 1.54      |   |      | $ | 1.60      |  
|Diluted                                                                                                                                                                                    |  |                         | 1.54      |   |      |   | 1.59      |  
|                                                                                                                                                                                           |  |                         |           |   |      |   |           |  
|Pro forma net income per common share:                                                                                                                                                     |  |                         |           |   |      |   |           |  
|Basic                                                                                                                                                                                      |  | $                       | 1.51      |   |      | $ | 1.55      |  
|Diluted                                                                                                                                                                                    |  |                         | 1.51      |   |      |   | 1.54      |  
|                                                                                                                                                                                           |  |                         |           |   |      |   |           |  



Net
income per common share



Basic net income per common share is based on the
weighted average number of common shares actually outstanding. Diluted net income per share is calculated by adjusting the weighted average number of shares of common stock outstanding to include the effect of stock options, if dilutive, using the
treasury stock method.



Reclassification



Certain amounts for prior periods have been reclassified to conform to the
current periods presentation.



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



Recent accounting pronouncements



In March 2004, the Financial Accounting Standards Board (FASB) reached consensus
on the guidance provided by Emerging Issues Task Force Issue 03-1 (EITF 03-1), The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments. The guidance is applicable to debt and equity securities that are
within the scope of FASB Statement of Financial Accounting Standard (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity Securities and certain other investments. EITF 03-1 specifies that an impairment would be
considered other-than-temporary unless (a) the investor has the ability and intent to hold an investment for a reasonable period of time sufficient for the recovery of the fair value up to (or beyond) the cost of the investment and (b) evidence
indicating the cost of the investment is recoverable within a reasonable period of time outweighs evidence to the contrary. EITF 03-1 cost method investment and disclosure provisions were effective for reporting periods ending after June 15, 2004.
The measurement and recognition provisions relating to debt and equity securities have been delayed until the FASB issues additional guidance. During the year ended December 31, 2004, the Company adopted the cost method investment and disclosure
provisions of EITF 03-1. The adoption did not have a material impact on the consolidated financial condition, results of operations or cash flows of the Company.



2. SECURITIES AVAILABLE FOR SALE



|                                                                 |  |                   |           |                  |        |                |  |   |        |  |   |          
|---------------------------------------------------------------- |  | ----------------- | --------- | ---------------- | ------ | -------------- |  | - | ------ |  | - | ---------
|                                                                 |  | December 31, 2003
|                                                                 |  | AmortizedCost     |           | Gross Unrealized |        | CarryingValue 
|                                                                 |  |                   | Gains     |                  | Losses |               
|Mortgage-backed securities                                       |  | $                 | 1,536,503 |                  | $      | 25,546         |  | $ |       |  | $ | 1,562,049
|Mutual funds                                                     |  |                   | 1,473,609 |                  |        |               |  |   | 9,832  |  |   | 1,463,777
|Trust originated preferred security, maturing after twenty years |  |                   | 500,000   |                  |        | 40,000         |  |   |       |  |   | 540,000  
|Equity security                                                  |  |                   | 7,020     |                  |        | 349,056        |  |   |       |  |   | 356,076  
|                                                                 |  |                   |           |                  |        |                |  |   |        |  |   |          
|                                                                 |  | $                 | 3,517,132 |                  | $      | 414,602        |  | $ | 9,832  |  | $ | 3,921,902
|                                                                 |  |                   |           |                  |        |                |  |   |        |  |   |          
|                                                                 | 
|                                                                 |  | December 31, 2004
|                                                                 |  | AmortizedCost     |           | Gross Unrealized |        | Carrying Value
|                                                                 |  |                   | Gains     |                  | Losses |               
|Mortgage-backed securities                                       |  | $                 | 1,098,323 |                  | $      | 15,636         |  | $ |       |  | $ | 1,113,959
|Mutual funds                                                     |  |                   | 1,508,571 |                  |        |               |  |   | 20,284 |  |   | 1,488,287
|Trust originated preferred security, maturing after twenty years |  |                   | 500,000   |                  |        | 32,400         |  |   |       |  |   | 532,400  
|Equity security                                                  |  |                   | 7,020     |                  |        | 497,516        |  |   |       |  |   | 504,536  
|                                                                 |  |                   |           |                  |        |                |  |   |        |  |   |          
|                                                                 |  | $                 | 3,113,914 |                  | $      | 545,552        |  | $ | 20,284 |  | $ | 3,639,182
|                                                                 |  |                   |           |                  |        |                |  |   |        |  |   |          



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



Notes to Consolidated Financial Statements (continued)



The unrealized losses, categorized by the length of time of continuous loss position, and the fair value of related
securities available for sale are as follows:



|             |  |                         |           |                         |   |            |  |                  |           |            |   |                  |  |   |           |  |   |       
|------------ |  | ----------------------- | --------- | ----------------------- | - | ---------- |  | ---------------- | --------- | ---------- | - | ---------------- |  | - | --------- |  | - | ------
|             |  | December 31, 2003      
|             |  | Less Than Twelve Months |           | More Than Twelve Months |   | Total     
|             |  | Fair Value              |           | UnrealizedLosses        |   | Fair Value |  | UnrealizedLosses |           | Fair Value |   | UnrealizedLosses
|Mutual funds |  | $                       | 1,463,777 |                         | $ | 9,832      |  | $                |          |            | $ |                 |  | $ | 1,463,777 |  | $ | 9,832 
|             |  |                         |           |                         |   |            |  |                  |           |            |   |                  |  |   |           |  |   |       
|             | 
|             |  | December 31, 2004      
|             |  | Less Than Twelve Months |           | More Than Twelve Months |   | Total     
|             |  | Fair Value              |           | UnrealizedLosses        |   | Fair Value |  | UnrealizedLosses |           | Fair Value |   | UnrealizedLosses
|Mutual funds |  | $                       |          |                         | $ |           |  | $                | 1,488,287 |            | $ | 20,284           |  | $ | 1,488,287 |  | $ | 20,284
|             |  |                         |           |                         |   |            |  |                  |           |            |   |                  |  |   |           |  |   |       



Management does not believe that any
of the unrealized losses at December 31, 2003 and 2004, represent an other-than-temporary impairment. The unrealized losses on mutual funds are on shares in a registered fund that invests primarily in short to moderate term fixed rate and adjustable
rate mortgage-backed securities and other money market instruments. These unrealized losses are due to changes in market interest rates that have occurred at a faster pace than the overall fund portfolio. The Bank has the intent and ability to hold
the mutual funds that comprise the above schedules for a time necessary to recover cost.



There were no sales of securities available for sale during the years ended December 31, 2002, 2003 and 2004.



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



3. INVESTMENT SECURITIES HELD TO MATURITY



|                                                    |  |                   |           |                  |        |                     |  |   |        |  |   |          
|--------------------------------------------------- |  | ----------------- | --------- | ---------------- | ------ | ------------------- |  | - | ------ |  | - | ---------
|                                                    |  | December 31, 2003
|                                                    |  | AmortizedCost     |           | Gross Unrealized |        | Estimated FairValue
|                                                    |  |                   | Gains     |                  | Losses |                    
|Subordinated notes due after five through ten years |  | $                 | 9,422,111 |                  | $      | 527,889             |  | $ |       |  | $ | 9,950,000
|                                                    |  |                   |           |                  |        |                     |  |   |        |  |   |          
|                                                    | 
|                                                    |  | December 31, 2004
|                                                    |  | AmortizedCost     |           | Gross Unrealized |        | Estimated FairValue
|                                                    |  |                   | Gains     |                  | Losses |                    
|Subordinated notes due after five through ten years |  | $                 | 9,308,686 |                  | $      | 571,072             |  | $ | 49,058 |  | $ | 9,830,700
|                                                    |  |                   |           |                  |        |                     |  |   |        |  |   |          



The unrealized losses, categorized by
the length of time of continuous loss position, and the fair value of related investment securities held to maturity at December 31, 2004 are as follows:



|                                                    |  |                         |           |                         |   |            |  |                   |   |            |   |                  |  |   |           |  |   |       
|--------------------------------------------------- |  | ----------------------- | --------- | ----------------------- | - | ---------- |  | ----------------- | - | ---------- | - | ---------------- |  | - | --------- |  | - | ------
|                                                    |  | Less Than Twelve Months |           | More Than Twelve Months |   | Total     
|                                                    |  | Fair Value              |           | Unrealized Losses       |   | Fair Value |  | Unrealized Losses |   | Fair Value |   | UnrealizedLosses
|Subordinated notes due after five through ten years |  | $                       | 2,243,800 |                         | $ | 49,058     |  | $                 |  |            | $ |                 |  | $ | 2,243,800 |  | $ | 49,058
|                                                    |  |                         |           |                         |   |            |  |                   |   |            |   |                  |  |   |           |  |   |       



Management does not believe that any
of the unrealized losses at December 31, 2004, represent an other-than-temporary impairment. The unrealized losses are on subordinated notes that earn interest at a fixed rate. Such unrealized losses are due to changes in market interest rates while
the above investments are at a fixed rate.



The Bank has the intent and ability
to hold the subordinated notes that comprise the above schedule for a time necessary to recover the amortized cost.



There were no sales of investment securities held to maturity during the years ended December 31, 2002, 2003 and 2004.



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



Notes to Consolidated Financial Statements (continued)



4. MORTGAGE -BACKED SECURITIES HELD TO MATURITY



|                                         |  |                   |             |                  |        |                      |  |   |           |  |   |            
|---------------------------------------- |  | ----------------- | ----------- | ---------------- | ------ | -------------------- |  | - | --------- |  | - | -----------
|                                         |  | December 31, 2003
|                                         |  | Amortized Cost    |             | Gross Unrealized |        | Estimated Fair Value
|                                         |  |                   | Gains       |                  | Losses |                     
|Federal Home Loan Mortgage Corporation   |  | $                 | 147,045,961 |                  | $      | 1,711,309            |  | $ | 906,034   |  | $ | 147,851,236
|Federal National Mortgage Association    |  |                   | 55,604,882  |                  |        | 717,259              |  |   | 750,040   |  |   | 55,572,101 
|Government National Mortgage Association |  |                   | 681,932     |                  |        | 54,875               |  |   |          |  |   | 736,807    
|Collateralized Mortgage Obligations      |  |                   | 15,085,565  |                  |        | 43                   |  |   | 211,036   |  |   | 14,874,572 
|                                         |  |                   |             |                  |        |                      |  |   |           |  |   |            
|                                         |  | $                 | 218,418,340 |                  | $      | 2,483,486            |  | $ | 1,867,110 |  | $ | 219,034,716
|                                         |  |                   |             |                  |        |                      |  |   |           |  |   |            
|                                         | 
|                                         |  | December 31, 2004
|                                         |  | Amortized Cost    |             | Gross Unrealized |        | Estimated Fair Value
|                                         |  |                   | Gains       |                  | Losses |                     
|Federal Home Loan Mortgage Corporation   |  | $                 | 140,792,994 |                  | $      | 1,316,745            |  | $ | 756,313   |  | $ | 141,353,426
|Federal National Mortgage Association    |  |                   | 42,919,890  |                  |        | 435,487              |  |   | 712,782   |  |   | 42,642,595 
|Government National Mortgage Association |  |                   | 420,986     |                  |        | 32,655               |  |   |          |  |   | 453,641    
|Collateralized Mortgage Obligations      |  |                   | 15,943,232  |                  |        | 92,128               |  |   | 163,057   |  |   | 15,872,303 
|                                         |  |                   |             |                  |        |                      |  |   |           |  |   |            
|                                         |  | $                 | 200,077,102 |                  | $      | 1,877,015            |  | $ | 1,632,152 |  | $ | 200,321,965
|                                         |  |                   |             |                  |        |                      |  |   |           |  |   |            



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



The unrealized losses, categorized by the length of time of continuous loss position, and the fair value of related
mortgage - backed securities held to maturity are as follows:



|                                    |  |                         |             |                         |   |            |  |                  |             |            |   |                  |  |   |             |  |   |          
|----------------------------------- |  | ----------------------- | ----------- | ----------------------- | - | ---------- |  | ---------------- | ----------- | ---------- | - | ---------------- |  | - | ----------- |  | - | ---------
|                                    |  | December 31, 2003      
|                                    |  | Less Than Twelve Months |             | More Than Twelve Months |   | Total     
|                                    |  | Fair Value              |             | UnrealizedLosses        |   | Fair Value |  | UnrealizedLosses |             | Fair Value |   | UnrealizedLosses
|Federal Home Loan Mortgage Corp.    |  | $                       | 83,705,893  |                         | $ | 906,034    |  | $                |            |            | $ |                 |  | $ | 83,705,893  |  | $ | 906,034  
|Federal National Mortgage Corp.     |  |                         | 37,481,305  |                         |   | 750,040    |  |                  |            |            |   |                 |  |   | 37,481,305  |  |   | 750,040  
|Collateralized Mortgage Obligations |  |                         | 14,872,192  |                         |   | 211,036    |  |                  |            |            |   |                 |  |   | 14,872,192  |  |   | 211,036  
|                                    |  |                         |             |                         |   |            |  |                  |             |            |   |                  |  |   |             |  |   |          
|                                    |  | $                       | 136,059,390 |                         | $ | 1,867,110  |  | $                |            |            | $ |                 |  | $ | 136,059,390 |  | $ | 1,867,110
|                                    |  |                         |             |                         |   |            |  |                  |             |            |   |                  |  |   |             |  |   |          
|                                    | 
|                                    |  | December 31, 2004      
|                                    |  | Less Than Twelve Months |             | More Than Twelve Months |   | Total     
|                                    |  | Fair Value              |             | UnrealizedLosses        |   | Fair Value |  | UnrealizedLosses |             | Fair Value |   | UnrealizedLosses
|Federal Home Loan Mortgage Corp.    |  | $                       | 12,098,365  |                         | $ | 50,059     |  | $                | 63,738,864  |            | $ | 706,254          |  | $ | 75,837,229  |  | $ | 756,313  
|Federal National Mortgage Corp.     |  |                         | 2,855,550   |                         |   | 4,224      |  |                  | 31,292,147  |            |   | 708,558          |  |   | 34,147,697  |  |   | 712,782  
|Collateralized Mortgage Obligations |  |                         | 3,723,693   |                         |   | 93,125     |  |                  | 5,142,666   |            |   | 69,932           |  |   | 8,866,359   |  |   | 163,057  
|                                    |  |                         |             |                         |   |            |  |                  |             |            |   |                  |  |   |             |  |   |          
|                                    |  | $                       | 18,677,608  |                         | $ | 147,408    |  | $                | 100,173,677 |            | $ | 1,484,744        |  | $ | 118,851,285 |  | $ | 1,632,152
|                                    |  |                         |             |                         |   |            |  |                  |             |            |   |                  |  |   |             |  |   |          



Management does not believe that any
of the unrealized losses at December 31, 2003 and 2004, represent an other-than-temporary impairment. The unrealized losses on the mortgage-backed securities portfolio are due primarily to fixed interest rate and to a lesser extent adjustable rate
securities held. Such losses are the result of changes in market interest rates.



The Bank has the intent and ability to hold the securities that comprise the above schedule for a time necessary to recover the amortized cost.



There were no sales of mortgage-backed securities held to maturity during the years ended December 31, 2002, 2003 and 2004.



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



Notes to Consolidated Financial Statements (continued)



5. LOANS RECEIVABLE



|                                         |  |              |             |   |      |   |             |  
|---------------------------------------- |  | ------------ | ----------- | - | ---- | - | ----------- | -
|                                         |  | December 31, |            
|                                         |  | 2003         |             |   | 2004 |  
|Real estate mortgage:                    |  |              |             |   |      |   |             |  
|One-to-four family                       |  | $            | 228,533,793 |   |      | $ | 222,334,364 |  
|Multi-family                             |  |              | 40,538,648  |   |      |   | 46,790,026  |  
|Commercial                               |  |              | 41,168,523  |   |      |   | 52,956,710  |  
|                                         |  |              |             |   |      |   |             |  
|                                         |  |              | 310,240,964 |   |      |   | 322,081,100 |  
|                                         |  |              |             |   |      |   |             |  
|Real estate construction                 |  |              | 11,225,286  |   |      |   | 16,848,745  |  
|                                         |  |              |             |   |      |   |             |  
|Land                                     |  |              | 1,373,985   |   |      |   | 1,423,341   |  
|                                         |  |              |             |   |      |   |             |  
|Commercial                               |  |              | 406,733     |   |      |   | 659,288     |  
|                                         |  |              |             |   |      |   |             |  
|Consumer:                                |  |              |             |   |      |   |             |  
|Passbook or certificate                  |  |              | 585,733     |   |      |   | 732,791     |  
|Home improvement                         |  |              | 229,153     |   |      |   | 132,993     |  
|Equity and second mortgage               |  |              | 59,757,904  |   |      |   | 59,014,687  |  
|Automobile                               |  |              | 734,138     |   |      |   | 637,352     |  
|Personal                                 |  |              | 1,144,480   |   |      |   | 1,041,559   |  
|                                         |  |              |             |   |      |   |             |  
|                                         |  |              | 62,451,408  |   |      |   | 61,559,382  |  
|                                         |  |              |             |   |      |   |             |  
|Total                                    |  |              | 385,698,376 |   |      |   | 402,571,856 |  
|                                         |  |              |             |   |      |   |             |  
|Less:                                    |  |              |             |   |      |   |             |  
|Loans in process                         |  |              | 5,168,432   |   |      |   | 5,154,803   |  
|Allowance for loan losses                |  |              | 2,515,000   |   |      |   | 2,495,000   |  
|Deferred loan fees (costs) and discounts |  |              | (625,829    | ) |      |   | (878,428    | )
|                                         |  |              |             |   |      |   |             |  
|                                         |  |              | 7,057,603   |   |      |   | 6,771,375   |  
|                                         |  |              |             |   |      |   |             |  
|                                         |  | $            | 378,640,773 |   |      | $ | 395,800,481 |  
|                                         |  |              |             |   |      |   |             |  



At December 31, 2002, 2003 and 2004,
non-accrual loans for which interest has been discontinued totaled approximately $1,485,000, $809,000, and $2,261,000, respectively.



During the years ended December 31, 2002, 2003 and 2004, the Bank recognized interest income of approximately $24,000, $35,000, and $94,000, respectively, on these loans.
Interest income that would have been recorded, had the loans been on the accrual status, would have amounted to approximately $151,000, $79,000, and $179,000 for the years ended December 31, 2002, 2003 and 2004, respectively. The Bank is not
committed to lend additional funds to the borrowers whose loans have been placed on nonaccrual status.



The following is an analysis of the allowance for loan losses:



|                                 |  |                         |           |   |      |   |           |      |  |   |           |  
|-------------------------------- |  | ----------------------- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                 |  | Year Ended December 31, |          
|                                 |  | 2002                    |           |   | 2003 |   |           | 2004 | 
|Balance, beginning               |  | $                       | 2,150,000 |   |      | $ | 2,550,000 |      |  | $ | 2,515,000 |  
|Provisions charged to operations |  |                         | 634,090   |   |      |   | 83,777    |      |  |   | 82,051    |  
|Recoveries credited to allowance |  |                         | 10,346    |   |      |   | 7,512     |      |  |   | 5,312     |  
|Loan losses charged to allowance |  |                         | (244,436  | ) |      |   | (126,289  | )    |  |   | (107,363  | )
|                                 |  |                         |           |   |      |   |           |      |  |   |           |  
|Balance, ending                  |  | $                       | 2,550,000 |   |      | $ | 2,515,000 |      |  | $ | 2,495,000 |  
|                                 |  |                         |           |   |      |   |           |      |  |   |           |  



Impaired loans and related amounts
recorded in the allowance for loan losses are summarized as follows:



|                                       |  |              |           |      |   |          
|-------------------------------------- |  | ------------ | --------- | ---- | - | ---------
|                                       |  | December 31,
|                                       |  | 2003         |           | 2004
|Recorded investment in impaired loans: |  |              |           |      |   |          
|With recorded allowances               |  | $            | 458,730   |      | $ | 768,486  
|Without recorded allowances            |  |              | 767,984   |      |   | 1,567,337
|                                       |  |              |           |      |   |          
|Total impaired loans                   |  |              | 1,226,714 |      |   | 2,335,823
|Related allowance for loan losses      |  |              | 173,730   |      |   | 210,901  
|                                       |  |              |           |      |   |          
|Net impaired loans                     |  | $            | 1,052,984 |      | $ | 2,124,922
|                                       |  |              |           |      |   |          



The activity with respect to loans to
directors, officers and associates of such persons, is as follows:



|                        |  |                            |           |  
|----------------------- |  | -------------------------- | --------- | -
|                        |  | Year EndedDecember 31,2004 |          
|Balance, beginning      |  | $                          | 2,326,826 |  
|Loans originated        |  |                            | 417,193   |  
|Collection of principal |  |                            | (361,170  | )
|                        |  |                            |           |  
|Balance, ending         |  | $                          | 2,382,849 |  
|                        |  |                            |           |  



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



6. PREMISES AND EQUIPMENT



|                              |  |              |           |      |   |          
|----------------------------- |  | ------------ | --------- | ---- | - | ---------
|                              |  | December 31,
|                              |  | 2003         |           | 2004
|Land                          |  | $            | 701,625   |      | $ | 701,625  
|                              |  |              |           |      |   |          
|Buildings and improvements    |  |              | 4,027,388 |      |   | 4,051,851
|Less accumulated depreciation |  |              | 1,945,466 |      |   | 2,073,539
|                              |  |              |           |      |   |          
|                              |  |              | 2,081,922 |      |   | 1,978,312
|                              |  |              |           |      |   |          
|Leasehold improvements        |  |              | 1,190,690 |      |   | 1,372,023
|Less accumulated amortization |  |              | 636,066   |      |   | 761,586  
|                              |  |              |           |      |   |          
|                              |  |              | 554,624   |      |   | 610,437  
|                              |  |              |           |      |   |          
|Furnishings and equipment     |  |              | 5,909,523 |      |   | 6,104,785
|Less accumulated depreciation |  |              | 5,155,011 |      |   | 5,376,659
|                              |  |              |           |      |   |          
|                              |  |              | 754,512   |      |   | 728,126  
|                              |  |              |           |      |   |          
|                              |  | $            | 4,092,683 |      | $ | 4,018,500
|                              |  |              |           |      |   |          



Depreciation expense for the years
ended December 31, 2002, 2003, and 2004 totaled approximately $606,000, $550,000, and $527,000, respectively. Depreciation charges are computed on the straight-line method over the following estimated useful lives:



|                           |  |               
|-------------------------- |  | --------------
|Buildings and improvements |  | 10 to 50 years
|Leasehold improvements     |  | 10 years      
|Furnishings and equipment  |  | 3 to 10 years 



7. INTEREST RECEIVABLE



|                                                                                                    |  |              |           |      |   |          
|--------------------------------------------------------------------------------------------------- |  | ------------ | --------- | ---- | - | ---------
|                                                                                                    |  | December 31,
|                                                                                                    |  | 2003         |           | 2004
|Loans, net of allowance for uncollected interest of approximately $55,000 and $93,000, respectively |  | $            | 1,737,368 |      | $ | 1,703,412
|Mortgage-backed securities                                                                          |  |              | 926,421   |      |   | 821,183  
|Investment securities                                                                               |  |              | 174,708   |      |   | 177,937  
|                                                                                                    |  |              |           |      |   |          
|                                                                                                    |  | $            | 2,838,497 |      | $ | 2,702,532
|                                                                                                    |  |              |           |      |   |          



8 . DEPOSITS



|                            |  |                     |   |      |        |             |         |        |                     |      |   |        |   |             |  |       
|--------------------------- |  | ------------------- | - | ---- | ------ | ----------- | ------- | ------ | ------------------- | ---- | - | ------ | - | ----------- |  | ------
|                            |  | December 31,       
|                            |  | 2003                |   | 2004
|                            |  | WeightedAverageRate |   |      | Amount |             | Percent |        | WeightedAverageRate |      |   | Amount |   | Percent    
|Demand:                     |  |                     |   |      |        |             |         |        |                     |      |   |        |   |             |  |       
|Non-interest-bearing demand |  | 0.00                | % |      | $      | 30,254,587  |         | 6.15   |                     | 0.00 | % |        | $ | 37,276,473  |  | 7.62  
|NOW                         |  | 1.00                | % |      |        | 41,592,334  |         | 8.45   |                     | 1.00 | % |        |   | 39,065,046  |  | 7.98  
|                            |  |                     |   |      |        |             |         |        |                     |      |   |        |   |             |  |       
|                            |  | 0.58                | % |      |        | 71,846,921  |         | 14.60  |                     | 0.51 | % |        |   | 76,341,519  |  | 15.60 
|Money Market                |  | 1.33                | % |      |        | 38,495,382  |         | 7.82   |                     | 1.50 | % |        |   | 38,263,106  |  | 7.82  
|Savings and club            |  | 1.35                | % |      |        | 179,463,134 |         | 36.46  |                     | 1.25 | % |        |   | 171,573,378 |  | 35.06 
|Certificates of deposit     |  | 2.39                | % |      |        | 202,355,328 |         | 41.12  |                     | 2.45 | % |        |   | 203,171,685 |  | 41.52 
|                            |  |                     |   |      |        |             |         |        |                     |      |   |        |   |             |  |       
|                            |  | 1.66                | % |      | $      | 492,160,765 |         | 100.00 |                     | 1.65 | % |        | $ | 489,349,688 |  | 100.00
|                            |  |                     |   |      |        |             |         |        |                     |      |   |        |   |             |  |       



The scheduled maturities of
certificates of deposit are as follows (in thousands):



|                         |  |              |         |      |   |        
|------------------------ |  | ------------ | ------- | ---- | - | -------
|                         |  | December 31,
|Maturity Period          |  | 2003         |         | 2004
|One year or less         |  | $            | 175,898 |      | $ | 158,927
|After one to three years |  |              | 21,661  |      |   | 37,583 
|After three years        |  |              | 4,796   |      |   | 6,662  
|                         |  |              |         |      |   |        
|                         |  | $            | 202,355 |      | $ | 203,172
|                         |  |              |         |      |   |        



Certificates of deposit of $100,000 or
more by the time remaining until maturity are as follows (in thousands):



|                                |  |              |        |      |   |       
|------------------------------- |  | ------------ | ------ | ---- | - | ------
|                                |  | December 31,
|Maturity Period                 |  | 2003         |        | 2004
|Three months or less            |  | $            | 12,239 |      | $ | 10,910
|After three through six months  |  |              | 11,612 |      |   | 11,422
|After six through twelve months |  |              | 32,538 |      |   | 30,908
|After twelve months             |  |              | 9,134  |      |   | 17,280
|                                |  |              |        |      |   |       
|                                |  | $            | 65,523 |      | $ | 70,520
|                                |  |              |        |      |   |       



A summary of interest on deposits
follows:



|                                                               |  |                         |            |   |      |   |           |      |  |   |           |  
|-------------------------------------------------------------- |  | ----------------------- | ---------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                                               |  | Year Ended December 31, |           
|                                                               |  | 2002                    |            |   | 2003 |   |           | 2004 | 
|Demand                                                         |  | $                       | 1,080,086  |   |      | $ | 1,029,530 |      |  | $ | 949,185   |  
|Savings and club                                               |  |                         | 3,428,455  |   |      |   | 3,118,465 |      |  |   | 2,391,441 |  
|Certificates of deposit                                        |  |                         | 6,983,647  |   |      |   | 5,550,866 |      |  |   | 4,789,629 |  
|                                                               |  |                         |            |   |      |   |           |      |  |   |           |  
|                                                               |  |                         | 11,492,188 |   |      |   | 9,698,861 |      |  |   | 8,130,255 |  
|Less penalties for early withdrawal of certificates of deposit |  |                         | (9,528     | ) |      |   | (7,340    | )    |  |   | (8,312    | )
|                                                               |  |                         |            |   |      |   |           |      |  |   |           |  
|                                                               |  | $                       | 11,482,660 |   |      | $ | 9,691,521 |      |  | $ | 8,121,943 |  
|                                                               |  |                         |            |   |      |   |           |      |  |   |           |  



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



Notes to Consolidated Financial Statements (continued)



9 . ADVANCES FROM FEDERAL HOME LOAN BANK OF NEW YORK



|                         |  |                             |   |      |        |            |                             |      |   |        |   |           
|------------------------ |  | --------------------------- | - | ---- | ------ | ---------- | --------------------------- | ---- | - | ------ | - | ----------
|                         |  | December 31,               
|                         |  | 2003                        |   | 2004
|Maturing by December 31, |  | WeightedAverageInterestRate |   |      | Amount |            | WeightedAverageInterestRate |      |   | Amount
|2004                     |  | 2.80                        | % |      | $      | 17,000,000 |                             |     | % |        | $ |          
|2005                     |  | 3.21                        | % |      |        | 20,000,000 |                             | 3.21 | % |        |   | 20,000,000
|2006                     |  | 3.35                        | % |      |        | 25,000,000 |                             | 3.31 | % |        |   | 32,000,000
|2007                     |  | 2.75                        | % |      |        | 8,000,000  |                             | 2.83 | % |        |   | 15,000,000
|2008                     |  | 4.85                        | % |      |        | 7,000,000  |                             | 4.53 | % |        |   | 12,000,000
|2010                     |  | 6.19                        | % |      |        | 10,000,000 |                             | 6.19 | % |        |   | 10,000,000
|                         |  |                             |   |      |        |            |                             |      |   |        |   |           
|                         |  | 3.60                        | % |      | $      | 87,000,000 |                             | 3.69 | % |        | $ | 89,000,000
|                         |  |                             |   |      |        |            |                             |      |   |        |   |           



At December 31, 2003 and 2004, the
advances were secured by pledges of the Banks investment in the capital stock of the Federal Home Loan Bank of New York totaling $4,743,900 and $5,151,900, respectively, and a blanket assignment of the Banks unpledged qualifying mortgage
loans, mortgage-backed securities and investment securities portfolios.



At
December 31, 2003 and 2004, the Company also had available to it $30,223,900 and $31,973,200, respectively, under a revolving overnight line of credit, expiring August 22, 2004 and July 29, 2005, respectively, with the Federal Home Loan Bank of New
York. The line of credit is secured by a specific pledge of mortgage-backed securities with carrying values and fair values of approximately $31,476,000 and $32,194,000 (2003), and $32,668,000 and $33,176,000 (2004). Borrowings are at the lenders
cost of funds plus .25%. There were no outstanding borrowings under the line of credit at December 31, 2003 and 2004.



10. OTHER BORROWED MONEY



|              |  |              |  |          |  |              |  |        
|------------- |  | ------------ |  | -------- |  | ------------ |  | -------
|              |  | December 31,
|              |  | 2003         |  | 2004    
|              |  | InterestRate |  | Amount   |  | InterestRate |  | Amount 
|Mortgage loan |  | 8.00%        |  | $117,748 |  | 8.00%        |  | $83,722
|              |  |              |  |          |  |              |  |        



The mortgage loan is payable in 144
equal monthly installments of $3,518 through February 1, 2007 and is secured by premises with a carrying value of $ 1,310,000 and $1,280,000 at December 31, 2003 and 2004, respectively.



11. REGULATORY CAPITAL



For the purpose of granting to eligible account holders a priority in the event of future liquidation, the Bank, at the time of conversion, established a special account
in an amount equal to its total retained earnings of $18.4 million at June 30, 1989. In the event of a future liquidation of the converted Bank (and only in such event), an eligible account holder who continues to maintain his deposit account shall
be entitled to receive a distribution from the special account. The total amount of the special account is decreased (but never increased) in an amount proportionately corresponding to decreases in the deposit account balances of eligible account
holders as of each subsequent year end. After conversion, no dividends may be paid to stockholders if such dividends would reduce the retained earnings of the converted Bank below the amount required by the special account.



The Bank is subject to various regulatory capital requirements administered by the banking
agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Bank. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets, liabilities, and certain off-balance-sheet items as calculated under
regulatory accounting practices. The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.



Quantitative measures established by regulation to ensure capital adequacy require the Bank
to maintain minimum amounts and ratios of Total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital to adjusted total assets (as defined). The following tables present a reconciliation of
capital per GAAP and regulatory capital and information as to the Banks capital levels at the dates presented:



|                                                              |  |              |        |   |      |   |        |  
|------------------------------------------------------------- |  | ------------ | ------ | - | ---- | - | ------ | -
|                                                              |  | December 31, |       
|                                                              |  | 2003         |        |   | 2004 |  
|GAAP capital                                                  |  | $            | 46,774 |   |      | $ | 51,039 |  
|Less: Investment in and advances to non-includable subsidiary |  |              | (365   | ) |      |   |       |  
|Unrealized (gain) on securities available for sale            |  |              | (243   | ) |      |   | (315   | )
|                                                              |  |              |        |   |      |   |        |  
|Core and tangible capital                                     |  |              | 46,166 |   |      |   | 50,724 |  
|Add: general valuation allowance                              |  |              | 2,341  |   |      |   | 2,284  |  
|                                                              |  |              |        |   |      |   |        |  
|Total regulatory capital                                      |  | $            | 48,507 |   |      | $ | 53,008 |  
|                                                              |  |              |        |   |      |   |        |  



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|30 |  | PAMRAPO BANCORP  2004



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



|                                                 |        |        |        |  |                             |        |  |                                                                  |        |  |        |   |       |   |        |  |       |  
|------------------------------------------------ | ------ | ------ | ------ |  | --------------------------- | ------ |  | ---------------------------------------------------------------- | ------ |  | ------ | - | ----- | - | ------ |  | ----- | -
|(Dollars in Thousands)                           |        | Actual |        |  | Minimum CapitalRequirements |        |  | To Be Well Capitalized Under Prompt Corrective Action Provisions |       
|                                                 | Amount |        | Ratio  |  |                             | Amount |  | Ratio                                                            |        |  | Amount |   | Ratio |  
|December 31, 2003:                               |        |        |        |  |                             |        |  |                                                                  |        |  |        |   |       |   |        |  |       |  
|Total Capital (to risk-weighted assets)          |        | $      | 48,507 |  | 15.13                       | %      |  | $                                                                | 25,645 |  | 8.00   | % |       | $ | 32,057 |  | 10.00 | %
|Tier 1 Capital (to risk-weighted assets)         |        |        | 46,166 |  | 14.40                       | %      |  |                                                                  |       |  |       |   |       |   | 19,234 |  | 6.00  | %
|Core (Tier 1) Capital (to adjusted total assets) |        |        | 46,166 |  | 7.26                        | %      |  |                                                                  | 25,451 |  | 4.00   | % |       |   | 31,814 |  | 5.00  | %
|Tangible Capital (to adjusted total assets)      |        |        | 46,166 |  | 7.26                        | %      |  |                                                                  | 9,544  |  | 1.50   | % |       |   |       |  |      |  
|                                                 |        |        |        |  |                             |       
|December 31, 2004:                               |        |        |        |  |                             |        |  |                                                                  |        |  |        |   |       |   |        |  |       |  
|Total Capital (to risk-weighted assets)          |        | $      | 53,008 |  | 15.89                       | %      |  | $                                                                | 26,694 |  | 8.00   | % |       | $ | 33,368 |  | 10.00 | %
|Tier 1 Capital (to risk-weighted assets)         |        |        | 50,724 |  | 15.20                       | %      |  |                                                                  |       |  |       |   |       |   | 20,021 |  | 6.00  | %
|Core (Tier 1) Capital (to adjusted total assets) |        |        | 50,724 |  | 7.92                        | %      |  |                                                                  | 25,610 |  | 4.00   | % |       |   | 32,013 |  | 5.00  | %
|Tangible Capital (to adjusted total assets)      |        |        | 50,724 |  | 7.92                        | %      |  |                                                                  | 9,604  |  | 1.50   | % |       |   |       |  |      |  



As of January 26, 2004, the most
recent notification from the Office of Thrift Supervision, the Bank was categorized as well capitalized under the regulatory framework for prompt corrective action. There are no conditions existing or events which have occurred since notification
that management believes have changed the institutions category.



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



Notes to Consolidated Financial Statements (continued)



12. BENEFIT PLANS



Pension Plan (Plan)



The Bank has a non-contributory defined benefit pension plan covering all eligible employees. The benefits are based on years of service and employees compensation.
The Banks funding policy is to contribute the maximum amount that can be deducted for federal income tax purposes. The Plans assets consist primarily of mutual funds, equity securities and bank deposits.



The following tables set forth the Plans funded status and components of net periodic
pension cost:



|                                           |  |              |            |   |      |   |            |  
|------------------------------------------ |  | ------------ | ---------- | - | ---- | - | ---------- | -
|                                           |  | December 31, |           
|                                           |  | 2003         |            |   | 2004 |  
|Change in Benefit Obligation               |  |              |            |   |      |   |            |  
|Benefit obligation at beginning of year    |  | $            | 5,670,347  |   |      | $ | 6,719,684  |  
|Service cost                               |  |              | 256,339    |   |      |   | 259,724    |  
|Interest cost                              |  |              | 371,695    |   |      |   | 416,240    |  
|Actuarial loss (gain)                      |  |              | 542,283    |   |      |   | (296,190   | )
|Benefits paid                              |  |              | (120,980   | ) |      |   | (263,905   | )
|                                           |  |              |            |   |      |   |            |  
|Benefit obligation at end of year          |  | $            | 6,719,684  |   |      | $ | 6,835,553  |  
|                                           |  |              |            |   |      |   |            |  
|Change in Plan Assets                      |  |              |            |   |      |   |            |  
|Fair value of assets at beginning of year  |  | $            | 5,444,022  |   |      | $ | 5,926,534  |  
|Actual gain on plan assets                 |  |              | 274,184    |   |      |   | 522,591    |  
|Employer contributions                     |  |              | 329,308    |   |      |   | 400,566    |  
|Benefits paid                              |  |              | (120,980   | ) |      |   | (263,905   | )
|                                           |  |              |            |   |      |   |            |  
|Fair value of assets at end of year        |  | $            | 5,926,534  |   |      | $ | 6,585,786  |  
|                                           |  |              |            |   |      |   |            |  
|Reconciliation of Funded Status            |  |              |            |   |      |   |            |  
|Accumulated benefit obligation             |  | $            | 5,771,037  |   |      | $ | 6,081,056  |  
|                                           |  |              |            |   |      |   |            |  
|Projected benefit obligation               |  | $            | 6,719,684  |   |      | $ | 6,835,553  |  
|Fair value of assets                       |  |              | (5,926,534 | ) |      |   | (6,585,786 | )
|                                           |  |              |            |   |      |   |            |  
|Funded status                              |  |              | 793,150    |   |      |   | 249,767    |  
|Unrecognized net (loss)                    |  |              | (2,818,291 | ) |      |   | (2,254,570 | )
|Unrecognized past service liability        |  |              | (143,778   | ) |      |   | (126,006   | )
|                                           |  |              |            |   |      |   |            |  
|(Prepaid) expense included in other assets |  | $            | (2,168,919 | ) |      | $ | (2,130,809 | )
|                                           |  |              |            |   |      |   |            |  
|Assumptions Used                           |  |              |            |   |      |   |            |  
|Discount rate                              |  |              | 6.25       | % |      |   | 6.25       | %
|Rate of increase in compensation           |  |              | 3.50       | % |      |   | 3.50       | %



|                                        |  |                         |          |   |      |   |          |      |  |   |          |  
|--------------------------------------- |  | ----------------------- | -------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|                                        |  | Year Ended December 31, |         
|                                        |  | 2002                    |          |   | 2003 |   |          | 2004 | 
|Net Periodic Pension Expense            |  |                         |          |   |      |   |          |      |  |   |          |  
|Service cost                            |  | $                       | 230,791  |   |      | $ | 256,339  |      |  | $ | 259,724  |  
|Interest cost                           |  |                         | 336,367  |   |      |   | 371,695  |      |  |   | 416,240  |  
|Expected return on assets               |  |                         | (338,524 | ) |      |   | (430,733 | )    |  |   | (479,336 | )
|Amortization of unrecognized loss       |  |                         | 68,393   |   |      |   | 176,412  |      |  |   | 224,276  |  
|Unrecognized past service liability     |  |                         | 13,329   |   |      |   | 17,772   |      |  |   | 17,772   |  
|                                        |  |                         |          |   |      |   |          |      |  |   |          |  
|Net periodic pension expense            |  | $                       | 310,356  |   |      | $ | 391,485  |      |  | $ | 438,676  |  
|                                        |  |                         |          |   |      |   |          |      |  |   |          |  
|Assumptions used                        |  |                         |          |   |      |   |          |      |  |   |          |  
|Discount rate                           |  |                         | 7.25     | % |      |   | 6.625    | %    |  |   | 6.25     | %
|Rate of increase in compensation        |  |                         | 4.50     | % |      |   | 4.00     | %    |  |   | 3.50     | %
|Long-term rate of return on plan assets |  |                         | 8.50     | % |      |   | 8.00     | %    |  |   | 8.00     | %



Plan
assets



For 2003 and 2004, the Plans assets realized an annual return of
5% and 7%, respectively. The weighted-average allocation by asset category is as follows:



|                           |  |              |   |  |      |  
|-------------------------- |  | ------------ | - |  | ---- | -
|                           |  | December 31, |  
|                           |  | 2003         |   |  | 2004 |  
|Certificates of deposit    |  | 37           | % |  | 31   | %
|Mutual fund shares         |  | 29           | % |  | 34   | %
|Mortgage-backed securities |  | 9            | % |  | 5    | %
|Equity securities          |  | 25           | % |  | 30   | %
|                           |  |              |   |  |      |  
|                           |  | 100          | % |  | 100  | %
|                           |  |              |   |  |      |  



For 2005, the Company intends to
maintain the current asset mix and seek to achieve an optimal risk/reward profile by limiting market exposure to present levels. Based on an analysis of the current market environment, we project a 2.5% return from certificates of deposit, a 5%
return from fixed income and an 8% return from equities, for an overall expected return of approximately 6%.



The long-term rate of return on assets assumption is set based on historical returns earned by equities and fixed income securities, adjusted to reflect expectations of future returns as applied to the Plans
actual target allocation of asset classes. Equities and fixed income securities are assumed to earn real rates of return in the ranges of 5-8% and 2-6%, respectively. Additionally, the long-term inflation rate is projected to be 3%. When these
overall return expectations are applied to a typical plans target allocation, the result is an expected return of 6% to 8%.



Equity securities include Pamrapo Bancorp, Inc. common stock in the amounts of $659,000 (11% of total plan assets) and $717,000 (11% of total plan assets) at December 31,
2003 and 2004, respectively.



Contributions



The Company expects to contribute approximately $400,000 to the pension plan
in 2005.



Estimated Future Benefit Payments



Benefit payments, which reflect expected future service, as appropriate, are
expected to be paid, for the years ended December 31, respectively, as follows:



|            |  |   |          
|----------- |  | - | ---------
|2005        |  | $ | 361,247  
|2006        |  |   | 369,310  
|2007        |  |   | 390,167  
|2008        |  |   | 434,513  
|2009        |  |   | 458,211  
|2010 - 2014 |  |   | 2,403,663



Savings and Investment Plan (SIP)



The Bank sponsors a
SIP pursuant to Section 401(k) of the Internal Revenue Code, for all eligible employees. Employees may elect to save up to 25% of their compensation of which the Savings Bank will match 50% of the first 10% of the employees contribution up to
a maximum of 5% of compensation. The SIP expense amounted to approximately, $124,000, $120,000 and $138,000 for the years ended December 31, 2002, 2003 and 2004, respectively.



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|32 |  | PAMRAPO BANCORP  2004



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



Supplemental Executive Retirement Plan ( SERP )



The Bank has an unfunded non-qualified deferred retirement plan for certain employees. A
participant who retires at age 65 (the Normal Retirement Age), is entitled to an annual retirement benefit equal to 75% of his compensation reduced by his retirement plan annual benefits. Participants retiring before the Normal
Retirement Age receive the same benefits reduced by a percentage based on years of service to the Bank and the number of years prior to the Normal Retirement Age that participant retires.



The following tables set forth the SERPs funded status and components of net periodic SERP cost:



|                                                      |  |              |           |   |      |   |           |  
|----------------------------------------------------- |  | ------------ | --------- | - | ---- | - | --------- | -
|                                                      |  | December 31, |          
|                                                      |  | 2003         |           |   | 2004 |  
|Projected benefit obligation at beginning of year     |  | $            | 2,790,762 |   |      | $ | 2,839,556 |  
|Interest cost                                         |  |              | 181,629   |   |      |   | 174,024   |  
|Actuarial (gain)                                      |  |              | (62,263   | ) |      |   | (205,099  | )
|Benefit payments                                      |  |              | (163,312  | ) |      |   | (110,384  | )
|Termination benefits                                  |  |              | 92,740    |   |      |   |          |  
|                                                      |  |              |           |   |      |   |           |  
|Projected benefit obligation at end of year           |  |              | 2,839,556 |   |      |   | 2,698,097 |  
|Plan assets at fair value                             |  |              |          |   |      |   |          |  
|                                                      |  |              |           |   |      |   |           |  
|Projected benefit obligation in excess of plan assets |  |              | 2,839,556 |   |      |   | 2,698,097 |  
|Unrecognized net loss                                 |  |              | (753,092  | ) |      |   | (493,633  | )
|Benefit paid in fourth quarter                        |  |              | (13,631   | ) |      |   | (13,631   | )
|Unrecognized past service liability                   |  |              | (493,484  | ) |      |   | (398,264  | )
|                                                      |  |              |           |   |      |   |           |  
|Accrued SERP cost included in other liabilities       |  | $            | 1,579,349 |   |      | $ | 1,792,569 |  
|                                                      |  |              |           |   |      |   |           |  
|Assumptions:                                          |  |              |           |   |      |   |           |  
|Discount rate                                         |  |              | 6.25      | % |      |   | 6.25      | %
|Rate of increase in compensation                      |  |              | 3.50      | % |      |   | 3.50      | %



Net periodic SERP cost includes the
following components:



|                                 |  |                         |         |   |      |   |         |      |  |   |         |  
|-------------------------------- |  | ----------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                 |  | Year Ended December 31, |        
|                                 |  | 2002                    |         |   | 2003 |   |         | 2004 | 
|Service cost                     |  | $                       | (11,265 | ) |      | $ |        |      |  | $ |        |  
|Interest cost                    |  |                         | 177,653 |   |      |   | 181,629 |      |  |   | 174,024 |  
|Net amortization                 |  |                         | 184,636 |   |      |   | 173,975 |      |  |   | 149,580 |  
|Special termination benefits     |  |                         |        |   |      |   | 92,740  |      |  |   |        |  
|                                 |  |                         |         |   |      |   |         |      |  |   |         |  
|Net periodic SERP cost           |  | $                       | 351,024 |   |      | $ | 448,344 |      |  | $ | 323,604 |  
|                                 |  |                         |         |   |      |   |         |      |  |   |         |  
|Contributions made               |  | $                       | 163,312 |   |      | $ | 110,384 |      |  | $ | 110,384 |  
|                                 |  |                         |         |   |      |   |         |      |  |   |         |  
|Assumptions:                     |  |                         |         |   |      |   |         |      |  |   |         |  
|Discount rate                    |  |                         | 7.25    | % |      |   | 6.625   | %    |  |   | 6.25    | %
|Rate of increase in compensation |  |                         | 4.50    | % |      |   | 4.00    | %    |  |   | 3.50    | %
|Amortization period (in years)   |  |                         | 4.94    |   |      |   | 7.83    |      |  |   | 8.63    |  



Stock
Options



Stock options granted under a stockholder approved stock option plan
may be either options that qualify as incentive stock options as defined in Section 422 of the Internal Revenue Code of 1986, as amended, or non-statutory options. Options vest in accordance with the plan and may be exercised up to ten years from
the date of grant. All options granted will be exercisable in the event the optionee terminates his employment, or due to death or disability. A summary of stock option activity follows:



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|www.pamrapo.com |  | 33



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



Notes to Consolidated Financial Statements (continued)



|                  |  |                         |   |  |                        |   |                                |         |   |  |   |               |  |   |      
|----------------- |  | ----------------------- | - |  | ---------------------- | - | ------------------------------ | ------- | - |  | - | ------------- |  | - | -----
|                  |  | Number of Option Shares |   |  | Range ofExercise Price |   | Weighted AverageExercise Price
|                  |  | Vested                  |   |  | Non-Vested             |   |                                | Total   |   |  |  
|December 31, 2002 |  |                        |   |  |                       |   |                                |        |   |  | $ |              |  | $ |     
|Options granted   |  | 68,741                  |   |  | 18,259                 |   |                                | 87,000  |   |  |   | 18.41         |  |   | 18.41
|Exercised         |  | (3,000                  | ) |  |                       |   |                                | (3,000  | ) |  |   | 18.41         |  |   | 18.41
|                  |  |                         |   |  |                        |   |                                |         |   |  |   |               |  |   |      
|December 31, 2003 |  | 65,741                  |   |  | 18,259                 |   |                                | 84,000  |   |  |   | 18.41         |  |   | 18.41
|Vesting           |  | 18,259                  |   |  | (18,259                | ) |                                |        |   |  |   | 18.41         |  |   | 18.41
|Options granted   |  | 36,000                  |   |  | 9,000                  |   |                                | 45,000  |   |  |   | 29.25         |  |   | 29.25
|Exercised         |  | (11,431                 | ) |  |                       |   |                                | (11,431 | ) |  |   | 18.41         |  |   | 18.41
|                  |  |                         |   |  |                        |   |                                |         |   |  |   |               |  |   |      
|December 31, 2004 |  | 108,569                 |   |  | 9,000                  |   |                                | 117,569 |   |  |   | 18.41 - 29.25 |  |   | 22.56
|                  |  |                         |   |  |                        |   |                                |         |   |  |   |               |  |   |      



At December 31, 2003 and 2004, the
weighted average remaining contractual life of the stock options granted was approximately 9.5 years and 8.8 years, respectively, and stock options for up to 67,380 and 22,380 additional shares respectively of common stock were available for future
grants. No options were forfeited during 2003 and 2004.



The Company, as
permitted by Financial Accounting Standards Board (FASB) Statement of Financial Accounting standards (SFAS) No. 123 , recognizes compensation cost for stock options granted based on the intrinsic value method instead of the
fair value based method . The grant-date fair values of the stock options granted during 2003 and 2004, which have exercise prices equal to the market price of the common stock at the grant date, were estimated using the Black-Scholes option-pricing
model . Such fair value and the assumptions used for estimating fair value are as follows:



|                                     |  |                         |           |   |      |   |           |  
|------------------------------------ |  | ----------------------- | --------- | - | ---- | - | --------- | -
|                                     |  | Year Ended December 31, |          
|                                     |  | 2003                    |           |   | 2004 |  
|Grant-date fair value per share      |  | $                       | 3.08      |   |      | $ | 9.39      |  
|Expected common stock dividend yield |  |                         | 4.35      | % |      |   | 2.87      | %
|Expected option life                 |  |                         | 7.0 years |   |      |   | 7.0 years |  
|Risk-free interest rate              |  |                         | 2.78      | % |      |   | 3.23      | %
|Volatility                           |  |                         | 25.61     | % |      |   | 37.99     | %



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|34 |  | PAMRAPO BANCORP  2004



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



13. INCOME TAXES



The Bank qualifies as a savings institution under the provisions of the Internal Revenue Code and was therefore, prior to January 1, 1996, permitted to deduct from
taxable income an allowance for bad debts based upon eight percent of taxable income before such deduction, less certain adjustments. Retained earnings at December 31, 2004, include approximately $6,907,000 of such bad debt, which, in accordance
with SFAS No. 109, Accounting for Income Taxes, is considered a permanent difference between the book and income tax basis of loans receivable, and for which income taxes have not been provided. If such amount is used for purposes other
than for bad debt losses, including distributions in liquidation, it will be subject to income tax at the then current rate.



The tax effect of existing temporary differences which give rise to significant portions of deferred tax assets and deferred tax liabilities are as follows:



|                                                 |  |              |           |      |   |          
|------------------------------------------------ |  | ------------ | --------- | ---- | - | ---------
|                                                 |  | December 31,
|                                                 |  | 2003         |           | 2004
|Deferred tax assets                              |  |              |           |      |   |          
|Allowance for losses                             |  | $            | 1,030,950 |      | $ | 1,026,972
|Deferred loan fees                               |  |              | 86,177    |      |   | 75,594   
|Depreciation                                     |  |              | 90,223    |      |   | 135,672  
|Reserve for uncollected interest                 |  |              | 21,877    |      |   | 37,015   
|                                                 |  |              |           |      |   |          
|                                                 |  |              | 1,229,227 |      |   | 1,275,253
|                                                 |  |              |           |      |   |          
|Deferred tax liabilities                         |  |              |           |      |   |          
|Benefit plans                                    |  |              | 224,084   |      |   | 125,172  
|Unrealized gain on securities available for sale |  |              | 161,600   |      |   | 209,800  
|                                                 |  |              |           |      |   |          
|                                                 |  |              | 385,684   |      |   | 334,972  
|                                                 |  |              |           |      |   |          
|Net deferred tax assets                          |  | $            | 843,543   |      | $ | 940,281  
|                                                 |  |              |           |      |   |          



The components of income taxes are
summarized as follows:



|                                |  |                         |           |   |      |   |           |      |  |   |           |  
|------------------------------- |  | ----------------------- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                |  | Year Ended December 31, |          
|                                |  | 2002                    |           |   | 2003 |   |           | 2004 | 
|Current tax expense:            |  |                         |           |   |      |   |           |      |  |   |           |  
|Federal                         |  | $                       | 3,376,150 |   |      | $ | 4,039,901 |      |  | $ | 4,247,060 |  
|State                           |  |                         | 1,019,074 |   |      |   | 1,227,493 |      |  |   | 1,270,427 |  
|                                |  |                         |           |   |      |   |           |      |  |   |           |  
|                                |  |                         | 4,395,224 |   |      |   | 5,267,394 |      |  |   | 5,517,487 |  
|                                |  |                         |           |   |      |   |           |      |  |   |           |  
|Deferred tax expense (benefit): |  |                         |           |   |      |   |           |      |  |   |           |  
|Federal                         |  |                         | 496,539   |   |      |   | (48,838   | )    |  |   | (99,914   | )
|State                           |  |                         | (105,531  | ) |      |   | (15,711   | )    |  |   | (45,024   | )
|                                |  |                         |           |   |      |   |           |      |  |   |           |  
|                                |  |                         | 391,008   |   |      |   | (64,549   | )    |  |   | (144,938  | )
|                                |  |                         |           |   |      |   |           |      |  |   |           |  
|                                |  | $                       | 4,786,232 |   |      | $ | 5,202,845 |      |  | $ | 5,372,549 |  
|                                |  |                         |           |   |      |   |           |      |  |   |           |  



The following table presents a
reconciliation between the reported income taxes and the income taxes which would be computed by applying the normal federal income tax rate of 34% to income before income taxes:



|                                                        |  |                         |           |      |   |           |      |  |   |          
|------------------------------------------------------- |  | ----------------------- | --------- | ---- | - | --------- | ---- |  | - | ---------
|                                                        |  | Year Ended December 31,
|                                                        |  | 2002                    |           | 2003 |   |           | 2004
|Federal income tax                                      |  | $                       | 4,049,272 |      | $ | 4,414,448 |      |  | $ | 4,527,551
|Increases (decreases) in income taxes resulting from:   |  |                         |           |      |   |           |      |  |   |          
|New Jersey income tax, net of federal income tax effect |  |                         | 603,430   |      |   | 799,776   |      |  |   | 808,766  
|Other items, net                                        |  |                         | 133,530   |      |   | (11,379   | )    |  |   | 36,232   
|                                                        |  |                         |           |      |   |           |      |  |   |          
|Effective income tax                                    |  | $                       | 4,786,232 |      | $ | 5,202,845 |      |  | $ | 5,372,549
|                                                        |  |                         |           |      |   |           |      |  |   |          



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|www.pamrapo.com |  | 35



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



Notes to Consolidated Financial Statements (continued)



14. COMMITMENTS AND CONTINGENCIES



The Bank is party to financial instruments with off-balance sheet risk in the normal course of business primarily to meet the financing
needs of its customers. These financial instruments include commitments to originate loans and purchase securities. The commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the
consolidated statement of financial condition. The Banks exposure to credit loss in the event of non performance by the other party to the financial instrument for commitments to extend credit is represented by the contractual notional amount
of those instruments. The Bank uses the same credit policies in making commitments as it does for on-balance sheet instruments.



Commitments to originate loans are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally
have fixed expiration dates or other termination clauses and may require payment of a fee. Since commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Savings Bank
evaluates each customers creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank, upon extension of credit is based on managements credit evaluation of the counterparty. Collateral
held varies but primarily includes residential real estate and income-producing commercial properties.



The Bank had loan commitments outstanding as follows:



|                   |  |              |            |      |   |           
|------------------ |  | ------------ | ---------- | ---- | - | ----------
|                   |  | December 31,
|                   |  | 2003         |            | 2004
|To originate loans |  | $            | 19,652,000 |      | $ | 16,816,000
|                   |  |              |            |      |   |           



At December 31, 2004, all the
outstanding commitments to originate loans are at fixed interest rates which range from 5.25% to 8.50%. All commitments are due to expire within ninety days.



At December 31, 2004, undisbursed funds from approved lines of credit under a homeowners equity and a commercial equity lending program amounted to approximately
$8,527,000 and $1,000,000, respectively. Unless they are specifically cancelled by notice from the Bank, these funds represent firm commitments available to the respective borrowers on demand. The interest rates charged for any month on funds
disbursed under these programs range from 0% to 4.25% above the prime rate.



Rental expenses related to the occupancy of premises totaled $272,000, $248,000 and $273,000 for the years ended December 31, 2002, 2003 and 2004, respectively. At December 31, 2004, minimum non-cancelable obligations under lease agreements
with original terms of more than one year are as follows:



|             |  |        |          
|------------ |  | ------ | ---------
|December 31, |  | Amount
|2005         |  | $      | 300,000  
|2006         |  |        | 307,000  
|2007         |  |        | 311,000  
|2008         |  |        | 181,000  
|2009         |  |        | 146,000  
|Thereafter   |  |        | 883,000  
|             |  |        |          
|             |  | $      | 2,128,000
|             |  |        |          



The Company, Bank and Service Corp.
are also parties to litigation which arises primarily in the ordinary course of business. In the opinion of management, the ultimate disposition of such litigation should not have a material effect on the consolidated financial position of the
Company.



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|36 |  | PAMRAPO BANCORP  2004



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



15. FAIR VALUES OF FINANCIAL INSTRUMENTS



The carrying amounts and fair value of the financial instruments are as follows (in
thousands):



|                                            |  |               |         |            |   |               |  |            |         |  |   |        
|------------------------------------------- |  | ------------- | ------- | ---------- | - | ------------- |  | ---------- | ------- |  | - | -------
|                                            |  | December 31, 
|                                            |  | 2003          |         | 2004      
|                                            |  | CarryingValue |         | Fair Value |   | CarryingValue |  | Fair Value
|Financial Assets                            |  |               |         |            |   |               |  |            |         |  |   |        
|Cash and cash equivalents                   |  | $             | 10,126  |            | $ | 10,126        |  | $          | 14,599  |  | $ | 14,599 
|Securities available for sale               |  |               | 3,922   |            |   | 3,922         |  |            | 3,639   |  |   | 3,639  
|Investment securities held to maturity      |  |               | 9,422   |            |   | 9,950         |  |            | 9,309   |  |   | 9,831  
|Mortgage-backed securities held to maturity |  |               | 218,418 |            |   | 219,035       |  |            | 200,077 |  |   | 200,322
|Loans receivable                            |  |               | 378,641 |            |   | 388,649       |  |            | 395,800 |  |   | 396,484
|Interest receivable                         |  |               | 2,838   |            |   | 2,838         |  |            | 2,703   |  |   | 2,703  
|                                            |  |               |         |           
|Financial Liabilities                       |  |               |         |            |   |               |  |            |         |  |   |        
|Deposits                                    |  |               | 492,161 |            |   | 492,948       |  |            | 489,350 |  |   | 488,833
|Advances and other borrowed money           |  |               | 87,118  |            |   | 89,741        |  |            | 89,084  |  |   | 89,951 
|                                            |  |               |         |           
|Commitments                                 |  |               |         |            |   |               |  |            |         |  |   |        
|To originate loans                          |  |               | 19,652  |            |   | 19,652        |  |            | 16,816  |  |   | 16,816 
|Unused lines of credit                      |  |               | 9,953   |            |   | 9,953         |  |            | 9,527   |  |   | 9,527  



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|www.pamrapo.com |  | 37



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



Notes to Consolidated Financial Statements (continued)



The fair value estimates are made at a discrete point in time based on relevant market information and information
about the financial instruments. Fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are
subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Further, the foregoing estimates may not reflect
the actual amount that could be realized if all or substantially all of the financial instruments were offered for sale.



In addition, the fair value estimates were based on existing on-and-off balance sheet financial instruments without attempting to value anticipated future business and
the value of assets and liabilities that are not considered financial instruments. Other significant assets and liabilities that are not considered financial assets and liabilities include mortgage servicing rights, premises and equipment and
advances from borrowers for taxes and insurance. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the
estimates.



Finally, reasonable comparability between financial institutions
may not be likely due to the wide range of permitted valuation techniques and numerous estimates which must be made given the absence of active secondary markets for many of the financial instruments. This lack of uniform valuation methodologies
introduces a greater degree of subjectivity to these estimated fair values.



16. PARENT COMPANY FINANCIAL INFORMATION



The following
condensed financial statements of the Company should be read in conjunction with the Notes to Consolidated Financial Statements.



STATEMENTS OF FINANCIAL CONDITION



|                                           |  |              |             |   |      |   |             |  
|------------------------------------------ |  | ------------ | ----------- | - | ---- | - | ----------- | -
|                                           |  | December 31, |            
|                                           |  | 2003         |             |   | 2004 |  
|Assets                                     |  |              |             |   |      |   |             |  
|Cash and cash equivalents                  |  | $            | 4,289,428   |   |      | $ | 4,009,612   |  
|Investment in subsidiary                   |  |              | 46,774,417  |   |      |   | 51,038,819  |  
|Refundable income taxes                    |  |              | 121,490     |   |      |   | 127,934     |  
|Other assets                               |  |              | 200,658     |   |      |   |            |  
|                                           |  |              |             |   |      |   |             |  
|Total assets                               |  | $            | 51,385,993  |   |      | $ | 55,176,365  |  
|                                           |  |              |             |   |      |   |             |  
|                                           |  |             
|Liabilities and stockholders equity       |  |              |             |   |      |   |             |  
|Liabilities                                |  |              |             |   |      |   |             |  
|Other liabilities                          |  | $            | 62,650      |   |      | $ | 62,150      |  
|                                           |  |              |             |   |      |   |             |  
|Total liabilities                          |  |              | 62,650      |   |      |   | 62,150      |  
|                                           |  |              |             |   |      |   |             |  
|                                           |  |             
|Stockholders equity                       |  |              |             |   |      |   |             |  
|Common stock                               |  |              | 69,000      |   |      |   | 69,000      |  
|Paid-in-capital in excess of par value     |  |              | 18,957,298  |   |      |   | 19,041,357  |  
|Retained earnings-substantially restricted |  |              | 54,865,096  |   |      |   | 58,702,496  |  
|Treasury stock, at cost                    |  |              | (22,568,051 | ) |      |   | (22,698,638 | )
|                                           |  |              |             |   |      |   |             |  
|Total stockholders equity                 |  |              | 51,323,343  |   |      |   | 55,114,215  |  
|                                           |  |              |             |   |      |   |             |  
|Total liabilities and stockholders equity |  | $            | 51,385,993  |   |      | $ | 55,176,365  |  
|                                           |  |              |             |   |      |   |             |  



|   |  |                       
|-- |  | ----------------------
|38 |  | PAMRAPO BANCORP  2004



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



STATEMENTS OF INCOME



|                                                                                        |  |                         |           |   |      |   |           |      |  |   |           |  
|--------------------------------------------------------------------------------------- |  | ----------------------- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                                                                        |  | Year Ended December 31, |          
|                                                                                        |  | 2002                    |           |   | 2003 |   |           | 2004 | 
|Dividends from subsidiary                                                               |  | $                       | 5,000,000 |   |      | $ | 5,000,000 |      |  | $ | 4,000,000 |  
|Interest income                                                                         |  |                         | 5,364     |   |      |   | 4,208     |      |  |   | 3,091     |  
|                                                                                        |  |                         |           |   |      |   |           |      |  |   |           |  
|Total income                                                                            |  |                         | 5,005,364 |   |      |   | 5,004,208 |      |  |   | 4,003,091 |  
|Expenses                                                                                |  |                         | 507,798   |   |      |   | 360,532   |      |  |   | 378,818   |  
|                                                                                        |  |                         |           |   |      |   |           |      |  |   |           |  
|Income before equity in undistributed earnings of subsidiary and income taxes (benefit) |  |                         | 4,497,566 |   |      |   | 4,643,676 |      |  |   | 3,624,273 |  
|Equity in undistributed earnings of subsidiary                                          |  |                         | 2,505,451 |   |      |   | 3,016,710 |      |  |   | 4,192,104 |  
|                                                                                        |  |                         |           |   |      |   |           |      |  |   |           |  
|Income before income taxes (benefit)                                                    |  |                         | 7,003,017 |   |      |   | 7,660,386 |      |  |   | 7,816,377 |  
|Income taxes (benefit)                                                                  |  |                         | (120,375  | ) |      |   | (120,440  | )    |  |   | (127,401  | )
|                                                                                        |  |                         |           |   |      |   |           |      |  |   |           |  
|Net income                                                                              |  | $                       | 7,123,392 |   |      | $ | 7,780,826 |      |  | $ | 7,943,778 |  
|                                                                                        |  |                         |           |   |      |   |           |      |  |   |           |  



STATEMENTS OF CASH FLOWS



|                                                                                  |  |                         |            |   |      |   |            |      |  |   |            |  
|--------------------------------------------------------------------------------- |  | ----------------------- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                                                  |  | Year Ended December 31, |           
|                                                                                  |  | 2002                    |            |   | 2003 |   |            | 2004 | 
|Cash flows from operating activities:                                             |  |                         |            |   |      |   |            |      |  |   |            |  
|Net income                                                                        |  | $                       | 7,123,392  |   |      | $ | 7,780,826  |      |  | $ | 7,943,778  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                         |            |   |      |   |            |      |  |   |            |  
|Equity in undistributed earnings of subsidiary                                    |  |                         | (2,505,451 | ) |      |   | (3,016,710 | )    |  |   | (4,192,104 | )
|(Increase) in refundable income taxes                                             |  |                         | (9,129     | ) |      |   | (525       | )    |  |   | (6,444     | )
|Decrease (increase) in other assets                                               |  |                         | 9,538      |   |      |   | (22,330    | )    |  |   | 200,658    |  
|Increase (decrease) in other liabilities                                          |  |                         | 10,090     |   |      |   | (50,440    | )    |  |   | (500       | )
|Distribution of treasury stock                                                    |  |                         | 197,500    |   |      |   |           |      |  |   | 14,850     |  
|                                                                                  |  |                         |            |   |      |   |            |      |  |   |            |  
|Net cash provided by operating activities                                         |  |                         | 4,825,940  |   |      |   | 4,690,821  |      |  |   | 3,960,238  |  
|                                                                                  |  |                         |            |   |      |   |            |      |  |   |            |  
|Cash flows from financing activities:                                             |  |                         |            |   |      |   |            |      |  |   |            |  
|Cash dividends paid                                                               |  |                         | (3,855,228 | ) |      |   | (4,048,120 | )    |  |   | (4,178,676 | )
|Sale of treasury stock                                                            |  |                         |           |   |      |   | 55,230     |      |  |   | 210,445    |  
|Purchase of treasury stock                                                        |  |                         | (279,328   | ) |      |   | (3,221,490 | )    |  |   | (271,823   | )
|                                                                                  |  |                         |            |   |      |   |            |      |  |   |            |  
|Net cash (used in) financing activities                                           |  |                         | (4,134,556 | ) |      |   | (7,214,380 | )    |  |   | (4,240,054 | )
|                                                                                  |  |                         |            |   |      |   |            |      |  |   |            |  
|Net increase (decrease) in cash and cash equivalents                              |  |                         | 691,384    |   |      |   | (2,523,559 | )    |  |   | (279,816   | )
|Cash and cash equivalents - beginning                                             |  |                         | 6,121,603  |   |      |   | 6,812,987  |      |  |   | 4,289,428  |  
|                                                                                  |  |                         |            |   |      |   |            |      |  |   |            |  
|Cash and cash equivalents - ending                                                |  | $                       | 6,812,987  |   |      | $ | 4,289,428  |      |  | $ | 4,009,612  |  
|                                                                                  |  |                         |            |   |      |   |            |      |  |   |            |  



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



17. QUARTERLY FINANCIAL DATA (UNAUDITED)



|                                                                          |  |               |       |                |   |               |  |                |       |  |   |      
|------------------------------------------------------------------------- |  | ------------- | ----- | -------------- | - | ------------- |  | -------------- | ----- |  | - | -----
|(In thousands, except for per share amounts) Year
Ended December 31, 2003 |  | First Quarter |       | Second Quarter |   | Third Quarter |  | Fourth Quarter
|Interest income                                                           |  | $             | 9,343 |                | $ | 9,312         |  | $              | 9,015 |  | $ | 9,085
|Interest expense                                                          |  |               | 3,623 |                |   | 3,553         |  |                | 3,350 |  |   | 2,907
|                                                                          |  |               |       |                |   |               |  |                |       |  |   |      
|Net interest income                                                       |  |               | 5,720 |                |   | 5,759         |  |                | 5,665 |  |   | 6,178
|Provision for loan losses                                                 |  |               | 30    |                |   | 30            |  |                | 20    |  |   | 4    
|Non-interest income                                                       |  |               | 573   |                |   | 667           |  |                | 711   |  |   | 604  
|Non-interest expenses                                                     |  |               | 3,156 |                |   | 3,269         |  |                | 3,255 |  |   | 3,129
|Income taxes                                                              |  |               | 1,260 |                |   | 1,263         |  |                | 1,249 |  |   | 1,431
|                                                                          |  |               |       |                |   |               |  |                |       |  |   |      
|Net income                                                                |  | $             | 1,847 |                | $ | 1,864         |  | $              | 1,852 |  | $ | 2,218
|                                                                          |  |               |       |                |   |               |  |                |       |  |   |      
|Net income per common share:                                              |  |               |       |                |   |               |  |                |       |  |   |      
|Basic                                                                     |  | $             | 0.36  |                | $ | 0.36          |  | $              | 0.37  |  | $ | 0.45 
|Diluted                                                                   |  | $             | 0.36  |                | $ | 0.36          |  | $              | 0.37  |  | $ | 0.45 
|                                                                          |  |               |       |                |   |               |  |                |       |  |   |      
|Dividends per common share                                                |  | $             | 0.20  |                | $ | 0.20          |  | $              | 0.20  |  | $ | 0.20 
|                                                                          |  |               |       |                |   |               |  |                |       |  |   |      
|                                                                          |  |               |       |               
|(In thousands, except for per share amounts) Year
Ended December 31, 2004 |  | FirstQuarter  |       | SecondQuarter  |   | ThirdQuarter  |  | FourthQuarter 
|Interest income                                                           |  | $             | 8,830 |                | $ | 8,927         |  | $              | 9,161 |  | $ | 9,065
|Interest expense                                                          |  |               | 2,822 |                |   | 2,788         |  |                | 2,877 |  |   | 2,904
|                                                                          |  |               |       |                |   |               |  |                |       |  |   |      
|Net interest income                                                       |  |               | 6,008 |                |   | 6,139         |  |                | 6,284 |  |   | 6,161
|Provision for loan losses                                                 |  |               | 10    |                |   | 10            |  |                | 10    |  |   | 52   
|Non-interest income                                                       |  |               | 611   |                |   | 654           |  |                | 557   |  |   | 777  
|Non-interest expenses                                                     |  |               | 3,366 |                |   | 3,490         |  |                | 3,331 |  |   | 3,605
|Income taxes                                                              |  |               | 1,297 |                |   | 1,328         |  |                | 1,408 |  |   | 1,340
|                                                                          |  |               |       |                |   |               |  |                |       |  |   |      
|Net income                                                                |  | $             | 1,946 |                | $ | 1,965         |  | $              | 2,092 |  | $ | 1,941
|                                                                          |  |               |       |                |   |               |  |                |       |  |   |      
|Net income per common share:                                              |  |               |       |                |   |               |  |                |       |  |   |      
|Basic                                                                     |  | $             | 0.39  |                | $ | 0.40          |  | $              | 0.42  |  | $ | 0.39 
|Diluted                                                                   |  | $             | 0.39  |                | $ | 0.39          |  | $              | 0.42  |  | $ | 0.39 
|                                                                          |  |               |       |                |   |               |  |                |       |  |   |      
|Dividends per common share                                                |  | $             | 0.21  |                | $ | 0.21          |  | $              | 0.21  |  | $ | 0.21 
|                                                                          |  |               |       |                |   |               |  |                |       |  |   |      



|   |  |                        
|-- |  | -----------------------
|40 |  | PAMRAPO BAN CORP  2004



---

PAMRAPO BANCORP, INC. AND SUBSIDIARIES



Report of Independent Registered Public Accounting Firm



To The Board of Directors and Stockholders

Pamrapo Bancorp, Inc.



We have audited the consolidated statements of financial condition of Pamrapo Bancorp, Inc. (the Company) and Subsidiaries as of December 31, 2003 and 2004, and the related consolidated statements of
income, comprehensive income, changes in stockholders equity and cash flows for each of the years in the three-year period ended December 31, 2004. These consolidated financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.



We conducted our audits in accordance with auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.



In our opinion, the above
mentioned consolidated financial statements present fairly, in all material respects, the financial position of Pamrapo Bancorp, Inc. and Subsidiaries as of December 31, 2003 and 2004, and the results of their operations and their cash flows for
each of the years in the three-year period ended December 31, 2004, in conformity with accounting principles generally accepted in the United States of America.





/s/    Radics & Co., LLC



February 4, 2005

Pine Brook, New Jersey



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|www.pamrapo.com |  | 41



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



Management Responsibility Statement



Management of Pamrapo Bancorp, Inc . and Subsidiaries is responsible for the preparation of
the consolidated financial statements and all other consolidated financial information included in this report. Consolidated financial statements were prepared in accordance with generally accepted accounting principles.



All consolidated financial information included in the report agrees with the consolidated
financial statements. In preparing the consolidated financial statements, management makes informed estimates and judgments with consideration given to materiality about ut the expected results of various events and transactions.



Management maintains a system of internal accounting control that includes personnel
selection, appropriate division of responsibilities and formal procedures and policies consistent with high standards of accounting and administrative practice. Consideration has been given to the necessary balance between the costs of systems of
internal control and the benefits derived.



Management reviews and modifies its
systems of accounting and internal control in light of changes in conditions and operations as well as in response to recommendations from the independent certified public accountants . Management believes the accounting and internal control systems
provide reasonable assurance that assets are safeguarded and the consolidated financial information is reliable.



The Board of Directors, through its Audit Committee of non-management directors, is responsible for determining that management fulfills its responsibilities in the
preparation of the consolidated financial statements and the control of operations. The Board appoints the independent certified public accountants . The Audit Committee meets with management, the independent certified public accountants, and also
the internal auditor, approves the overall scope of audit work and related fee arrangements, and reviews audit reports and findings.



|                                     
|-------------------------------------
|                                     
|/s/    WILLIAM J.
CAMPBELL           
|William J. Campbell                  
|President and Chief Executive Officer



|                                                    
|----------------------------------------------------
|                                                    
|/s/    Kenneth D. Walter                            
|Kenneth D. Walter                                   
|Vice President / Treasurer / Chief Financial Officer



|                       
|-----------------------
|                       
|/s/    Robert A. Hughes
|Robert A. Hughes       
|Vice President         



|   |  |                       
|-- |  | ----------------------
|42 |  | PAMRAPO BANCORP  2004



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



Selected Consolidated Financial Condition and Operating
Data of the Company



|                                  |  |                 |         |      |   |         |  |      |         |      |   |         |  |   |        
|--------------------------------- |  | --------------- | ------- | ---- | - | ------- |  | ---- | ------- | ---- | - | ------- |  | - | -------
|                                  |  | At December 31,
|(In Thousands)                    |  | 2000            |         | 2001 |   | 2002    |  | 2003 |         | 2004
|Financial condition data:         |  |                 |         |      |   |         |  |      |         |      |   |         |  |   |        
|Total amount of:                  |  |                 |         |      |   |         |  |      |         |      |   |         |  |   |        
|Assets                            |  | $               | 469,558 |      | $ | 539,639 |  | $    | 588,659 |      | $ | 636,895 |  | $ | 639,899
|Loans receivable                  |  |                 | 309,082 |      |   | 369,239 |  |      | 389,865 |      |   | 378,641 |  |   | 395,800
|Securities available for sale     |  |                 | 5,713   |      |   | 5,304   |  |      | 4,543   |      |   | 3,922   |  |   | 3,639  
|Mortgage-backed securities        |  |                 | 118,791 |      |   | 122,418 |  |      | 146,138 |      |   | 218,418 |  |   | 200,077
|Investment securities             |  |                 | 6,996   |      |   | 5,000   |  |      | 7,095   |      |   | 9,422   |  |   | 9,309  
|Deposits                          |  |                 | 379,410 |      |   | 416,587 |  |      | 445,507 |      |   | 492,161 |  |   | 489,350
|Advances and other borrowed money |  |                 | 35,788  |      |   | 67,518  |  |      | 84,489  |      |   | 87,118  |  |   | 89,084 
|Stockholders equity              |  |                 | 46,529  |      |   | 47,523  |  |      | 50,756  |      |   | 51,323  |  |   | 55,114 



|                          |  |                         |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|------------------------- |  | ----------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | - |  | ---- | ------ | - |  | - | ------ | -
|                          |  | Year Ended December 31, |       
|(In Thousands)            |  | 2000                    |        |   | 2001 |   |        | 2002 |  |   | 2003   |   |  | 2004 |       
|Operating data:           |  |                         |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Interest income           |  | $                       | 33,162 |   |      | $ | 36,625 |      |  | $ | 38,058 |   |  | $    | 36,755 |   |  | $ | 35,983 |  
|Interest expense          |  |                         | 15,498 |   |      |   | 17,544 |      |  |   | 15,290 |   |  |      | 13,433 |   |  |   | 11,391 |  
|Net interest income       |  |                         | 17,664 |   |      |   | 19,081 |      |  |   | 22,768 |   |  |      | 23,322 |   |  |   | 24,592 |  
|Provision for loan losses |  |                         | 208    |   |      |   | 459    |      |  |   | 634    |   |  |      | 84     |   |  |   | 82     |  
|Non-interest income       |  |                         | 1,576  |   |      |   | 1,921  |      |  |   | 2,566  |   |  |      | 2,555  |   |  |   | 2,599  |  
|Non-interest expenses     |  |                         | 11,988 |   |      |   | 12,635 |      |  |   | 12,791 |   |  |      | 12,809 |   |  |   | 13,792 |  
|Income taxes              |  |                         | 2,568  |   |      |   | 2,908  |      |  |   | 4,786  |   |  |      | 5,203  |   |  |   | 5,373  |  
|                          |  |                         |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Net income                |  | $                       | 4,476  |   |      | $ | 5,000  |      |  | $ | 7,123  |   |  | $    | 7,781  |   |  | $ | 7,944  |  
|                          |  |                         |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Net income per share      |  |                         |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Basic                     |  | $                       | 0.85   |   |      | $ | 0.97   |      |  | $ | 1.39   |   |  | $    | 1.54   |   |  | $ | 1.60   |  
|Diluted                   |  |                         | 0.85   |   |      |   | 0.97   |      |  |   | 1.39   |   |  |      | 1.54   |   |  |   | 1.59   |  
|                          |  |                         |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Dividends per share       |  | $                       | 0.69   |   |      | $ | 0.72   |      |  | $ | 0.75   |   |  | $    | 0.80   |   |  | $ | 0.84   |  
|                          |  |                         |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Dividend payout ratio     |  |                         | 80.84  | % |      |   | 74.23  | %    |  |   | 54.12  | % |  |      | 52.02  | % |  |   | 52.60  | %
|                          |  |                         |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  



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|www.pamrapo.com |  | 43



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



Selected Consolidated Financial Condition and Operating
Data of the Company (continued)



|                                                                             |  |                                   |   |  |       |   |  |       |   |  |        |   |  |       |  
|---------------------------------------------------------------------------- |  | --------------------------------- | - |  | ----- | - |  | ----- | - |  | ------ | - |  | ----- | -
|                                                                             |  | At or For Year Ended December 31, |  
|(In Thousands)                                                               |  | 2000                              |   |  | 2001  |   |  | 2002  |   |  | 2003   |   |  | 2004  |  
|Selected Financial Ratios:                                                   |  |                                   |   |  |       |   |  |       |   |  |        |   |  |       |  
|Return on average assets                                                     |  | 0.99                              | % |  | 0.99  | % |  | 1.26  | % |  | 1.25   | % |  | 1.24  | %
|Return on average equity                                                     |  | 9.57                              | % |  | 10.76 | % |  | 14.52 | % |  | 15.45  | % |  | 15.00 | %
|Average equity/average assets                                                |  | 10.30                             | % |  | 9.24  | % |  | 8.70  | % |  | 8.08   | % |  | 8.26  | %
|Interest rate spread                                                         |  | 3.53                              | % |  | 3.48  | % |  | 3.77  | % |  | 3.57   | % |  | 3.66  | %
|Net yield on average interest-earning assets                                 |  | 4.08                              | % |  | 3.95  | % |  | 4.18  | % |  | 3.86   | % |  | 3.92  | %
|Non-interest expenses to                                                     |  |                                   |   |  |       |   |  |       |   |  |        |   |  |       |  
|average assets                                                               |  | 2.64                              | % |  | 2.50  | % |  | 2.27  | % |  | 2.06   | % |  | 2.15  | %
|Equity/total assets                                                          |  | 9.91                              | % |  | 8.81  | % |  | 8.62  | % |  | 8.06   | % |  | 8.61  | %
|Capital ratios:                                                              |  |                                   |   |  |       |   |  |       |   |  |        |   |  |       |  
|Tangible                                                                     |  | 8.27                              | % |  | 7.26  | % |  | 7.08  | % |  | 7.26   | % |  | 7.92  | %
|Core                                                                         |  | 8.27                              | % |  | 7.26  | % |  | 7.08  | % |  | 7.26   | % |  | 7.92  | %
|Risk-based                                                                   |  | 16.29                             | % |  | 14.43 | % |  | 14.35 | % |  | 15.13  | % |  | 15.89 | %
|Non-performing loans to total assets                                         |  | 0.87                              | % |  | 0.60  | % |  | 0.46  | % |  | 0.24   | % |  | 0.41  | %
|Non-performing loans to loans receivable                                     |  | 1.30                              | % |  | 0.88  | % |  | 0.69  | % |  | 0.41   | % |  | 0.67  | %
|Non-performing assets to total assets                                        |  | 1.00                              | % |  | 0.65  | % |  | 0.49  | % |  | 0.24   | % |  | 0.41  | %
|Allowance for loan losses to non-performing loans                            |  | 47.74                             | % |  | 65.95 | % |  | 94.41 | % |  | 161.53 | % |  | 96.44 | %
|Average interest-earning assets/average interest-bearing liabilities         |  | 1.15x                             |   |  | 1.13x |   |  | 1.14x |   |  | 1.13x  |   |  | 1.14x |  
|Net interest income after provision for loan losses to non-interest expenses |  | 1.46x                             |   |  | 1.47x |   |  | 1.73x |   |  | 1.81x  |   |  | 1.79x |  



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|-- |  | -----------------------
|44 |  | PAMRAPO BAN CORP  2004



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PAMRAPO BANCORP, INC. AND SUBSIDIARIES



Stockholder Information



MARKET FOR COMMON STOCK AND RELATED MATTERS



Pamrapo Bancorp, Inc.s common stock is presently quoted on the National Association of
Securities Dealers Automated Quotations National Market System under the symbol PBCI. At March 9, 2005, the Companys 4,975,542 outstanding shares of common stock were held by approximately 1,900 persons or entities.



The following table sets forth the high and low closing sales price per common
share for the periods indicated. Such prices do not necessarily reflect retail markups, markdowns or commissions.



|                   |  |                |       |     |   |      
|------------------ |  | -------------- | ----- | --- | - | -----
|                   |  | CLOSING PRICES
|QUARTER ENDED      |  | HIGH           |       | LOW
|March 31, 2003     |  | $              | 18.60 |     | $ | 16.45
|June 30, 2003      |  |                | 18.55 |     |   | 17.00
|September 30, 2003 |  |                | 23.12 |     |   | 17.70
|December 31, 2003  |  |                | 25.65 |     |   | 20.91
|March 31, 2004     |  |                | 29.45 |     |   | 24.90
|June 30, 2004      |  |                | 29.49 |     |   | 23.17
|September 30, 2004 |  |                | 23.22 |     |   | 20.25
|December 31, 2004  |  |                | 24.73 |     |   | 22.27



|                                |  |   |    
|------------------------------- |  | - | ---
|DIVIDENDS WERE PAID AS FOLLOWS: |  |  
|March, 2003                     |  | $ | .20
|June, 2003                      |  |   | .20
|September, 2003                 |  |   | .20
|December, 2003                  |  |   | .20
|March, 2004                     |  |   | .21
|June, 2004                      |  |   | .21
|September, 2004                 |  |   | .21
|December, 2004                  |  |   | .21



Future dividend policy will be
determined by the Board of Directors after giving consideration to the Companys financial condition, results of operations, tax status, industry standards, economic conditions and other factors. Dividends will also depend upon dividend
payments by the Bank to the Company, which is its primary source of income. The Board may also consider the payment of stock dividends from time to time, in addition to, or in lieu of cash dividends.



Under federal regulations, the Bank may not declare or pay a cash dividend on any of its
common stock if the effect thereof would cause the Banks regulatory capital to be reduced below the amount required for the liquidation account or the regulatory capital requirements imposed by the Office of Thrift Supervision
(OTS). The Bank must provide at least 30 days advance notice to the OTS before declaring a dividend.



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|www.pamrapo.com |  | 45